Essar's Indonesian coal block gets go-ahead

FTSE 250 energy group Essar Energy has confirmed that is has received the approval needed to start mining its Aries coal project in Indonesia.

In a statement on Friday afternoon, Essar said that it has received the final 'Pinjam Pakai' forest approval, which now means that it can accelerate development at Aries to provide fuel for its Salaya I power plant.

"This is a major step forward in our strategy of providing full fuel security for all of our power generation assets, thereby eliminating price and delivery risks," said Chief Executive Officer Naresh Nayyar.

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The Aries coal mine, which Essar acquired in April 2010 for $118m, is 5,000 hectares in area and is located in the West Kutai region of East Kalimantan.

Essar has already started constructing the supporting road and port infrastructure; it is expected that first coal will be available within nine to 12 months.

"Essar Energy has access to over 500 million tonnes of coal resources across seven coal blocks in India and overseas. This coal is sufficient to provide fuel to 5,250 MW of Essar Energy's power generation capacity," the statement said.

Despite the positive news, Essar was trading 4.35% lower at 118.89p by 14:58 in London.

BC