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India’s NLC aborts overseas coal acquisition plans

12th December 2017

By: Ajoy K Das

Creamer Media Correspondent

     

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KOLKATA (miningweekly.com) – Indian miner and power utility NLC (formerly Neyveli Lignite Corporation) is seeking a global mine developer and operator to operationalise two of its coal blocks in Odisha.

The group is expecting at least 20-million tons a year from these two assets, which have a combined reserve of 550-million tons, and has therefore aborted plans to buy coal assets overseas.

The miner, which has 6 000 MW of coal-based power generation capacity, 2 500 MW of lignite-based plants and plans to ramp up its capacity to 19 000 MW by 2025, believes that securing domestic coal assets will be sufficient to meets its projected requirement of dry fuel without having to invest in acquiring coal assets overseas.

The company has been allocated the Talibara I and Talibara II coal blocks in Odisha along with another block in Jharkhand province. NLC has also petitioned the Coal Ministry for allocation of more coal blocks under the preferential allotment dispensation for government-owned energy companies, officials said.

NLC’s dry fuel production averaged 27-million to 30-million tons a year over the past few years.

Over the previous two financial years, the company had a cash surplus of about $600-million, which it had sought to use for acquiring coal assets overseas.

Until early this year, NLC reportedly had received 18 offers and had held preliminary negotiations with miners in Australia, Indonesia and Mozambique to pick up part equity in coal assets and start production through joint venture partnerships.

It may be noted that the Indian government has proposed to disinvest 5% of the equity stake held by it in NLC through an offer for sale of 3% of equity and the option to retain over-subscription for an additional 2% equity.

Analysts pointed out that the government could be expected to get higher valuations from its disinvestment of equity in NLC now that the group will not be going ahead with overseas acquisitions, which could have necessitated raising fresh debt and increasing the debt-equity ratio of the company.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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