KOLKATA (miningweekly.com) - Indian mining major Coal India Limited (CIL) has earmarked $42-million to be spent on the social sector in Mozambique, in an effort to overcome socio-political roadblocks in developing coal assets in the African nation.

CIL, which would be providing the fund for social sector investments, including industrial vocational training to locals, has submitted its plans to the Indian Foreign Affairs Ministry, as the social investments would be routed to Mozambique on a bilateral government-to-government basis, a CIL official said.

The social sector investments were a precursor on the road to completing exploration of the coal blocks by December 2013, and to starting mining operations by 2017, the official said.

CIL, the world’s largest coal miner, was awarded two coal blocks at Moatize in the Tete province in 2009 and, late last year, the miner awarded a $80-million exploration contract to Tribeni Minerals Mozambique across the 205 km² blocks with estimated reserves of one-billion tonnes of thermal and coking coal.

CIL had undertaken the development of the block through its wholly owned subsidiary, Coal India Africana.

However, in 2012, the government of Mozambique lodged an official complaint during bilateral dialogues with the Indian government regarding delays in starting up the Tete project, the CIL official said.

From the Mozambique government’s perspective, the coal block developer had not been doing enough in committing social sector development spending allied to development of the coal blocks, while the Indian miner maintained that the Mozambique government had failed to create infrastructure required, including railheads necessary for evacuation of coal to the nearest port.

CIL argued that social sector investments could not be made a precondition for speedy development of the coal blocks since the miner’s interest in the country was entirely commercial. The face-off reached a near breaking point last year with CIL at one stage considering pulling out of its Mozambique project.

However, the project was kept on track by interventions from the Indian government, which felt that withdrawing from the project would give the wrong impression of India’s overall interests in the African region, the CIL official said.

According to the official, it was pressed upon CIL by the Indian government that its African project could not be considered a pure commercial venture and the miner would have to provide for social sector investments, as these were almost mandatory as a facilitator of commercial investments in developing countries.