India Shopping for Coal Mines in Appalachia

October 23, 2008
As Clifford Krauss pointed out last spring, the United States, in response to increasing global demand, has become a major exporter of coal for the first time in years, forcing domestic buyers to compete with others from countries like Germany and Japan.
Now it appears that India — a giant in coal production itself — is doing some window-shopping of its own in American mine towns, not just to secure exports, but to invest.
(And all this at a time when the globe is ostensibly embracing a migration away from fossil fuels and the reduction of C02 emissions.)
Following up on a tidbit published in India's Business Standard last week, our New Delhi bureau chief, Somini Sengupta, confirms today that Santosh Bagrodia, India's coal minister, and Partha Sarathi Bhattacharyya, the chairman of Coal India, were on a shopping trip in the Appalachians last week.
Ms. Sengupta wrote in an e-mail message:
"[The] Coal India chairman says he has $4 billion to play with, but that finalizing a deal will take a while. India imports 50 million tons of coal a year, which is expected to sharply rise as demand for power generation and steel and cement industry grows. "If we are to meet a part of this gap we would look at something better than imports," the Coal India chairman said. "If we want to make foreign coal available in the country it should be through acquisitions."
As a percentage of total production, foreign direct investment in coal production in the United States dropped precipitously in 2004, from 21 percent to 14 percent, when RAG (Germany), RWE (Germany), and Itochu (Japan) sold their interests, according to data released earlier this year by the Energy Information Administration.
The largest remaining foreign companies active in coal production in the United States, according to the E.I.A., are Rio Tinto and BHP Billiton (Australia) and Scottish Power.
Coal India, a state-run enterprise and the largest producer in India, began signaling its interest in investing in foreign energy sources as far back as June.
The Indian contingent visiting the United States, according to Ms. Sengupta, suggested it's a buyer's market.