KOLKATA (miningweekly.com) – Major Coal India Limited (CIL) has decided to relinquish 75% of the acreage of two of its licensed coal blocks in the Tete province in Mozambique.
According to a CIL official the decision to hand over the bulk of the area was prompted by the local government increasing the charges of holding on the two blocks, which in any case had not yielded any coal of significant quality.
On condition of anonymity, a CIL official said that despite three years of exploration, no coal has been discovered on the two blocks, and a board meeting of CIL’s wholly owned African subsidiary, Coal India Africana Limited, last week decided to hand back the 205 km2 of land to local authorities.
The failure of the Mozambique investment was a setback considering that the two blocks marked CIL’s maiden venture, which was acquired in 2009 as the bilateral government-to-government initiative between India and Mozambique.
While CIL’s reluctance to pursue the Mozambique project was reported by Mining Weekly Online in May, it was believed that the Indian Coal Ministry had advised to go slow in pulling out of the project on account of diplomatic considerations.
While CIL was asked to defer the final pull-out call until September or October, the decision of the local authorities in Tete to double the holding charges for A1 and A2 blocks prompted the CIL subsidiary to seek the decision to relinquish, which was ratified by its board of directors.
In 2009, CIL acquired a six-year exploratory licence for A1 and A2 blocks in Mozambique’s Tete province, and after spending $80-million on exploration no coal was indicated at the blocks. Citing tests on samples, officials said that “exploratory yields could not be even categorized as coal”.
The Indian miner earlier this year internally decided not to pursue development of the blocks as initial assessment that 20% of the reserves could yield high grade coal for steel smelting, while the balance would be thermal grade coal, had not stood up to exploratory scrutiny.