Essar Power is currently building six power projects in India, increasing its power generation capacity from 1220MW to 6100MW by 2012. The company added that the transaction is part of Essar Power’s strategy to continue to achieve backward integration and to secure raw material needs for its operations.

The Aries coal mines are located in the Kutai region of East Kalimantan in Indonesia. The high-quality bituminous coal has Gross Calorific Value (GCV) of 6,000 with low ash and low moisture and is suitable for power plants. Production from the Indonesian mine is expected to start within a year.

Anshuman Ruia, director of Essar Group, said: “We are a vertically integrated power producer, with ownership and access to the raw materials needed to run the business.

“The Indonesia mines are an excellent addition to our growing portfolio of coal assets. This acquisition adds another 100 million tonnes to our existing thermal coal resource base of about 275 million tonnes in India.”

The transaction is subject to regulatory approvals and is expected to be closed by April 2010.