Home >industry >energy >ICVL to invest $500 million in its Mozambique coal mines

Hyderabad: State-owned International Coal Ventures Ltd (ICVL) will invest $500 million to create logistic and other infrastructure support in the next two-three years at its recently acquired coal mines in Mozambique, a senior official of the public sector undertaking (PSU) said.

ICVL is also looking to appoint a full-time official with rich experience in coal mining to head the operation of the Mozambique mines to turn them into a profitable venture, he said. ICVL signed the pact on 28 July to buy Rio Tinto’s 65% stake in Benga and 100% each in Zambeze and Tete East coal assets in the African nation for $50 million. Currently Benga, the only operational mine, produces about 5 million tonnes (mt) per annum and is making cash losses.

The mines need creation of about 500 km railway lines and ports, he said. “There are logistic issues. At this point of time it (mining operations) is making cash losses. There are about 1 billion tonnes of coal reserves available. It needs another $500 millions in the next two to three years. It is a very good strategic investment," the official said, adding that the immediate goal is to ramp up the production to 12 mt per annum.

As of now, 5 mt of coal is yielding 2 mt of washed coal which is being taken by the Tatas, a partner in Benga with a 35% stake, he said. As of now there is no plan to rope in a third partner for creation of necessary infrastructure for ramping up of production, he said.

“It needs about 3,000 crore ($500 million). All the PSUs can put together and invest over a period of time. I don’t see any necessity for an outsider to join us," the official explained. ICVL, a joint venture of Steel Authority of India Ltd, Coal India Ltd, Rashtriya Ispat Nigam Ltd, NTPC Ltd and NMDC Ltd, was created to ensure long-term security of supply of the critical raw material for the steel industry.

NTPC has expressed its intention to opt out of the joint venture (JV). Replying to a query, he said the PSU is mulling to appoint senior and experienced person to head Mozambique operations.

“We are trying to put a core team headed by an expert (in coal mining for Mozambique). The person may not necessarily be from the four PSUs. He could be an outsider also. Except Coal India, none of the partners has much of coal mining experience," the official added. Rio Tinto had bought these assets through acquisition of Riversdale Mining Limited in 2011 for $4 billion. However, in 2013, it wrote off $3.5 billion of the purchase price. All three assets put together are estimated to hold about 2.6 billion tonnes of coal reserves.

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