International Coal Ventures Pvt Ltd (ICVL), which was set up in 2009 by five Indian state-run metal and mineral firms to acquire coal assets from abroad, has entered into an agreement to buy Mozambique coal mine and coal assets of British-Australian mining giant Rio Tinto for $50 million, according to a stock market disclosure.
As per the agreement, ICVL will acquire the Tete East project, Zambezee and the Benga mine, which have 2.6 billion tonnes of coal resource. Rio Tinto had bought the assets in 2011 when it bought Riversdale Mining Ltd for a whopping $3.9 billion and had to later write off much of the investment value which also led to the sacking of its chief executive (who now heads Vedanta).
Benga mine, in which ICVL will have 65 per cent stake, produces prime hard coking and thermal coal.
“The Mozambique acquisition by ICVL is a significant and historic development towards assuring long-term coking coal security as Indian steel companies need higher input of raw material to fuel their growth,” said CS Verma, chairman of SAIL and ICVL.
“Mozambique has the geographical advantage of being in proximity to India. This acquisition gives the steel companies under the Ministry of Steel a strong foothold in this sought after coal basin,” he said.
The acquisition of coal assets is, however, subject to certain conditions and regulatory approvals and is expected to close in the current quarter.
Formed in 2009 with Rs 10,000 crore authorised capital, ICVL is a consortium of five state-run firms, namely Steel Authority of India Ltd, National Mineral Development Corp Ltd, NTPC Ltd, Rashtriya Ispat Nigam Ltd and Coal India Ltd.
Although ICVL has been linked to several prospective deals, this marks its first acquisition since its inception.
While RINL and SAIL are looking to increase their capacity to 23 MTPA and 6.3 MTPA, respectively, their coking coal requirement would rise to a level of nearly 25 million tonnes by 2015. NMDC is also setting up a 3 MTPA capacity integrated steel plant at Nagarnar in Chhattisgarh.
(Edited by Joby Puthuparampil Johnson)