Mahan Coal Co. (MCC), a joint venture between Hindalco Industries and Essar power (a Aditya Birla Group flagship) is likely to commence development of coal mine by December 2006 at the Mahan Block of Sidhi-Singrauli fields in Madhya Pradesh, following the allotment of mine by the Centre.

Essar Power is investing Rs.4,000 crore for a 1,000 MW power project in Madhya Pradesh, while Hindalco is setting up a 750 MW captive power plant with an estimated investment of Rs.2,400 crore. Both the power plants are expected to start production by 2010.

To source coal for the power plants, both companies had signed a shareholders' agreement and formed MCC. MCC has started the field study at Mahan to prepare detailed report to support the mining procedure and as per the lease agreement, Essar will use 60 per cent of the coal output and Hindalco will take the remaining 40 percent.

The development of the field is expected to be completed by 2009 after which the coal production will begin to fuel the power plants of both Essar and Hindalco.