KOLKATA (miningweekly.com) – India’s largest thermal power producer NTPC has decided to exit from the special purpose vehicle International Coal Ventures Limited (ICVL), which was aimed at acquiring coal assets overseas.

Instead, NTPC was considering teaming up with Coal India Limited (CIL) and Shipping Corporation of India (SCI) to set up a coal import and shipping logistics company that would deliver imported coal at doorsteps of Indian bulk consumers.

For CIL, the proposed coal logistics company was expected to provide support to the miner’s coal assets in Mozambique. Coal India Africana Limitada, a wholly owned subsidiary of CIL, was slated to complete all developmental work for two coal blocks in Mozambique’s north-western province of Tete which was estimated to have a reserve of one-billion tons.

The work would be completed within the next 12 months.

The blocks had been acquired by CIL in 2009, but development had been delayed by the absence of infrastructure to evacuate the coal. The Indian miner expected to leverage Indian Railways competency, which could have a tie-up in the logistic venture, to create necessary rail links in Mozambique, and SCI to provide shipping facilities at ports.

NTPC, for its part had drawn up plans to import 16-million tons of thermal grade coal as feedstock during the current year. CIL, the world’s largest coal producer, has received five proposals for long-term coal supplies from overseas miners and planned to import 25-million tons a year.

But the miner had to put long-term supply contract negotiations on the backburner because of lack of logistical infrastructure at Indian ports and handling facilities which prevented CIL from assuring doorstep delivery, as was being demanded by its bulk customers.

“Talks with NTPC and CIL are in an advanced stage in forming the logistics joint venture company,” SCI chairperson S Hajara said.

The promoters of the coal logistics company were trying to woo State-owned Indian Railways to join the proposed venture that would enable delivery of coal from ports to customers’ yards through railroad linkages.

i-maritime Consultants has been appointed with the mandate to advise on developing the business model of the logistics company and shipping, warehousing and bulk handing practices.

ICVL was floated in 2008, as a special purpose vehicle by Steel Authority of India and Rashtriya Ispat Nigam, a steel producer along with NTPC and CIL. But despite a corpus of $2-billion the venture failed to secure any coal assets overseas, as per its initial mandate.

NTPC has refused to comment on the reasons for its exit of ICVL, but officials said that differences in the strategic objectives of each of the constituents of ICVL, and its resultant failure to secure overseas assets, were the major reasons for NTPC teaming up for a logistics company wherein CIL would leverage long-term supply contracts, SCI its transportation competencies and NTPC the consumption side of thermal coal.

CIL's board of directors would meet next week to discuss participation in the proposed coal logistics company including the extent of equity participation. This would be a strategic fit for the miner’s global plans including starting production from coal assets in Mozambique, officials said.

CIL was also in talks to acquire interests in US energy major Peabody’s Wilkie Creek mine, in Australia, Sinar Mas’ Borneo Inclobana and G3 mines, in Indonesia, and Massey Energy’s Sidney underground mines in the US. The proposed logistics company could be incorporated into the plans to establish more efficient import linkages between the mines and Indian customers, officials said.
 

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