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Exim ‘no’ may hit $310 mn RPower deal

A decision of the US Export-Import Bank to reject a request by Reliance Power...

Written by Agencies | New York | Published: June 28, 2010 11:47:19 am

A decision of the US Export-Import Bank to reject a request by Reliance Power,run by Indian billionaire Anil Ambani,may lead to the cancellation of a USD 310-million mining equipment order to Wisconsin firm Bucyrus,a media report said Sunday.

Bucyrus International Inc may lose a USD 310-million order for mining machinery from Reliance Power because of a decision by the US Exim Bank against providing loan guarantees for the project,the Wall Street Journal reported.

Quoting Tim Sullivan,CEO of the South Milwaukee mining equipment manufacturer,the report said that the decision is equivalent to “throwing 1,000 jobs in the ditch.”

Bucyrus has expected the order to create or protect 984 jobs in 13 US states,the WSJ report said. The mining equipment was supposed to be used for a coal mine that is to provide for a new power plant in Madhya Pradesh,India.

Sullivan was quoted as saying that the order from Reliance was contingent on the guarantees,and he feared Reliance would turn to rival suppliers from China or Belarus.

Bucyrus International Inc designs and manufactures mining equipment for surface and underground mining. Bucyrus surface equipment is used for mining coal,copper,iron ore,oil sands and other minerals. Its underground equipment is primarily used to mine coal.

The US Exim Bank had rejected a request from Reliance Power to provide about USD 450 million for its USD 4.5-billion ultra-mega power project in Sasan,Madhya Pradesh,on environmental grounds.

At a meeting held in Washington on Thursday,the three-member Board of the US Exim Bank — chaired by Fred Hichberg — voted two to one against financing the Sasan project,a senior US Exim Bank official told PTI.

According to people familiar with Indian power industry,the decision could deter the US power and mining equipment industry from participating in Indian projects.

The US Exim Bank had recently established and implemented a carbon policy that requires its board of directors to carefully consider the potentially adverse environmental impact of high-carbon intensity transactions.

Reliance Power’s Sasan plant was reportedly projected to emit close to 26,000-27,000 tonnes of carbon dioxide per year.

This comes in the backdrop of US President Barack Obama determining that power projects of the kind should move away from carbon-based fuel towards renewable ones.

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