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ICVL may bid for coal mines in Australia

ICVL may bid for coal mines in Australia
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First Published: Wed, Aug 26 2009. 12 28 AM IST

Precious fuel: A file photo of coal mining in India. Most Indian companies seek the commodity for their own projects, while rival bidders may have higher-margin alternative plans, say analysts. Hindus
Precious fuel: A file photo of coal mining in India. Most Indian companies seek the commodity for their own projects, while rival bidders may have higher-margin alternative plans, say analysts. Hindus
Updated: Wed, Aug 26 2009. 12 28 AM IST
New Delhi: International Coal Ventures Pvt. Ltd (ICVL), a company set up by five state-owned firms to secure coal assets overseas, plans to bid for concessions in the East Bargo area of Australia, which has reserves of around 330 million tonnes (mt) of the scarce fuel.
The move may potentially bring ICVL in competition with leading Chinese government-run coal miners such as China Shenhua Energy Co. Ltd and Yanzhou Coal Mining Co. Ltd, which are actively engaged in acquiring mining concessions overseas.
Precious fuel: A file photo of coal mining in India. Most Indian companies seek the commodity for their own projects, while rival bidders may have higher-margin alternative plans, say analysts. Hindustan Times
ICVL, owned by NTPC Ltd, Steel Authority of India Ltd (SAIL), Coal India Ltd (CIL), Rashtriya Ispat Nigam Ltd (RINL) and NMDC Ltd, is interested in submitting an expression of interest (EoI) sought by the Australian government for concessions.
The last date for submission of EoI for the 96 sq. km area is 15 October.
“We are interested in the Australian property,” said a senior executive at CIL, who asked not to be identified given the sensitive nature of the issue.
CIL controls most of India’s supply of coal.
The successful bidders will be awarded a coal exploration licence for an initial period of five years.
Questions emailed to Julie Moloney, principal adviser in Australian government’s Department of Primary Industries, on Monday remained unanswered at the time this edition went to the press. The department will scrutinize the bids.
ICVL executive Ajay Mathur did not respond to phone calls and to a text message to his mobile phone.
The East Brago area, in New South Wales state, is located 30km north-west of the seaside city of Wollongong and around 920km south-south west of Sydney, the state capital and Australia’s largest city.
ICVL is competing with Chinese firms overseas to acquire scarce coal assets. Analysts say that bids by Indian miners tend to be relatively uncompetitive. That’s because most Indian firms seek the coal for their own end-use projects, while rival bidders may have higher-margin alternative plans.
India has 256 billion tonnes of coal reserves, of which around 455 mt per annum is mined. The country imports around 40 mt of coal. Demand is expected to reach around two billion tonnes a year by 2031-32, around five times the current rate of extraction, with most of it coming from the power sector.
“The hunt for coal assets has never been so intense, with the Chinese pouncing on all that is there to grab. Indian players carry a fear of making wrong moves in a volatile market faced with difficult value estimation, which keeps their decision-making process hamstrung...,” said Dipesh Dipu, principal consultant (mining) with audit and consulting firm PricewaterhouseCoopers.
“Also, the Chinese government backs the state-owned enterprises with credit facilities and direct funding, which is in contrast with Indian state-owned companies that need to pool their internal accruals,” he added. “Private companies, too, have been faced with lower credit availability due to liquidity crisis.”
“Bottom line is that there are opportunities for the braveheart and those with cash bags full,” Dipu added.
utpal.b@livemint.com
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First Published: Wed, Aug 26 2009. 12 28 AM IST