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Coal India May Acquire Mines Overseas in Two Years (Update1) By Manash Goswami and Archana Chaudhary March 4 (Bloomberg) -- Coal India Ltd., the state-owned monopoly that controls most of the nation's supply of the fuel, plans to acquire mines overseas in the next two years. The company is seeking mines producing at least 5 million metric tons a year to be commercially viable, Coal India marketing director K. Ranganath said in an interview in New Delhi today. ``We need the supplies to meet the country's growing requirement,'' Ranganath said. ``The mine has to be of a minimum size to justify setting up port facilities, working out shipping linkages and all other infrastructure.'' The acquisitions are planned to boost domestic supplies, which lag behind demand. India's economy, Asia's third-biggest, has grown more than 8 percent annually since 2003, boosting the need for coal for power producers, cement companies and steelmakers to make cars and appliances. Coal India, based in Kolkata, plans to buy coking coal mines in Australia, Zimbabwe and Mozambique and thermal coal mines in Indonesia and South Africa, Ranganath said at a conference today. It is also seeking technology partnerships for underground coal with companies in China, Australia and the U.K. Expansion Expenditure The company expects to spend 90 billion rupees ($2.2 billion) over five years to increase output as India faces a shortage of 51.1 million tons of coal by 2012, Ranganath said. The company will use its own funds for the expansion. Production is expected to rise to 405 million tons next year and 520 million tons by 2011-12 from 380 million tons now, he said. India may import 60 million tons of coal annually by 2012, Anil Razdan, the nation's power secretary, said at the conference. Coal India may import 20 million tons in the year starting April 1, Ranganath said. India, one of the world's five biggest buyers of coal, uses the fuel to fire more than half its 141,080-megawatt electricity generation capacity. A lack of fuels, including coal and gas, slowed India's capacity addition to 21,180 megawatts in the five years ended March 31, 2007, compared with the target of 41,110 megawatts, according to the Power Ministry's Web site. India is making ``steady progress'' in increasing power capacity and is poised to meet the government-set target in the next five years, helping to end blackouts in the world's second- fastest growing major economy, the Economic Survey prepared by Finance Minister Palaniappan Chidambaram's advisers said on Feb. 28. The power industry is expected to grow at 9.5 percent annually in the five years, the report said. The government plans to add 78,755 megawatts, Power Minister Sushilkumar Shinde has said. During peak hours, India's electricity supply falls 14.8 percent short of demand, compared with 13 percent estimated previously, and 8.4 percent during non-peak hours, the survey said. Higher output is needed to help Prime Minister Manmohan Singh sustain economic growth of more than 9 percent in the next five years. To contact the reporters on this story: Manash Goswami in New Delhi at [e-mail]; Archana Chaudhary in Mumbai at [e-mail].