Exim decision on R-Power may affect Bucyrus's $310-mn order

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 $310-million mining equipment order to Wisconsin firm Bucyrus, a media report said on Sunday. Bucyrus International Inc may lose a $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.  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 $450 million for its $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 said.

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.