KOLKATA (miningweekly.com) - Making its first international foray, Coal India Africana Limitada (CIAL), a wholly owned subsidiary of Coal India Limited (CIL), would shortly start exploratory and development work at two coal blocks in Mozambique’s north-western Tete province, estimated to have a reserve of one-billion tons.
The Central Mine Planning and Design Institute, under CIL, has completed initial prospecting and exploratory drilling, with geological mapping expected to start within the next few months.
Following the visit of India’s Coal Minister Sriprakash Jaiswal early this year, the Mozambican government agreed to build infrastructure including a rail link to facilitate evacuation of the coal to India. CIAL, which successfully bid for the blocks in 2009, had not been able to start development work untill now, in the absence of infrastructure to evacuate the coal.
To expand its global footprint, CIL is seeking joint venture (JV) partners with asset owners and operators in South Africa, Australia and Indonesia to develop coal blocks and sign long-term supply agreements.
“Coal Videsh, a division of CIL, is pursuing foreign ventures through structured deals to import coal into India. Our preferred destinations are South Africa, Australia and Indonesia,” CIL chairperson and MD, N C Jha said.
“Proposed structured deals could include acquisition of stakes in existing assets or joint venture partnershipsin developing greenfield coal assets in these countries,” Jha said.
The three models of structured deals being considered by CIL included equity investment by the company in brownfield coal projects with long-term offtake contracts at a price less than the prevailing import price, long-term offtake contract on a cost plus basis, but less than prevailing import price, and the formation of a JV for exploration, development and operation of greenfield coal assets in South Africa, Australia or Indonesia.
Nonbinding offers for equity investment in brownfield coal projects and JVs for exploration, development and operation of greenfield projects have been sent to coal companies in the three countries and due diligence was under way, Jha said, without divulging the identities of the coal companies to which offers had been made.
Meanwhile, on the domestic front, stung by a nil growth in production, at 431.32-million tons during 2010/11, CIL was stepping on the gas to complete 42 new mining projects, expecting to add 88.71-million tons a year to total 2011/12 production.
“CIL has 80 projects, entailing investments of $2.47-billion, at various stages of implementation, which together will add 195.78-million tons to our production,” Jha said.
“In 2010/11, 37 new projects went into partial production, which contributed 88.37-million tons to the production for the year. By 2016/17, plans to complete a total of 149 new mining projects, entailing an investment of $ 5.69-billion, would give an incremental production of 438.73-million tons a year,” he added.
However, the company’s plans to increase coal production by reviving 18 abandoned mines, with reserves of 1.6-billion tons of high grade coking and thermal coal, through JVs, has failed to evoke interest from global mining majors with experience in underground mining.
“In the first round of limited tendering, none of the short-listed companies responded. Some companies suggested softer tendering conditions. These conditions have been examined and accepted,” Jha said.
“A second round of limited tendering is under process. If this also does not yield any result, we shall go in for global tendering to invite international mining companies for partnership to revive the abandoned mines,” he added.
Meanwhile, on Thursday, CIL emerged as India’s most valuable company, achieving a market capitalisation of $54.8-billion, with the company’s share price gaining 2.6% at $8.69, overtaking Reliance Industries, which recorded a market capitalisation of $54-billion.
CIL debuted on the bourse in November 2010, following its initial public offering last year.