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Kolkata/New Delhi: India’s efforts to buy equity in overseas coal mines may falter because of inordinate delays in state-run Coal India Ltd’s attempts to start mining at the two Mozambique fields.

“There are problems with Coal India’s Mozambique project. Apart from operationalizing the mines, they were also supposed to build an institute for coal mining. That is yet to happen," an Indian government official said, requesting anonymity.

The miner’s presence in Mozambique is through Coal India Africana Ltd, where it has a toehold with its mines in Moatize. However, the project has been delayed by around two years. While the Mozambique exploration licence was obtained in August 2009, it was only in June 2011 that a formal management structure was floated within the firm and the African unit’s the board was formed.

The concern over delays was voiced by Abdul Razak Noormahomed, Mozambique’s vice minister of mineral resources.

“We are concerned with the delays by Coal India," he said. “We are working with them so that they fulfil the commitments made by them."

The delays come at a time when China is building a significant presence in Mozambique. The airport in capital Maputo is also Chinese-built.

“Though there have been some procedural delays, we have made considerable progress in Mozambique over the last three-four months,’ Coal India chairman S. Narsing Rao said. “The exploration contract would be awarded within the next two weeks and exploration will commence latest by December."

Coal India had also proposed to build local infrastructure including institutions such as Central Mine Planning and Design Institute Ltd in Mozambique. The two countries had signed an agreement in May 2006 to promote bilateral cooperation in the field of coal resources.

Initially, 10,000 metres of drilling will be done with the exploration contract size valued at 10 crore. The deadline for commencing coal production will be finalized once the coal reserves are evaluated after exploration.

This comes in the backdrop of India’s coal shortage with the state-owned firm having mined only 431 million tonnes (mt) in 2010-11 against a target of 461.5 mt.

Coal demand in India is expected to grow from 649 mt per annum (mtpa) now to 730 mtpa in 2016-17. The availability of local coal is estimated at 550 mt in 2016-17. India’s demand for imported coal is growing and stands at an annual 137 mt.

The environmental clearance for the exploration has been received. This month, Ernst and Young was chosen as the consultant to finalize the capital structure of Coal India’s Mozambique unit.

Steady economic growth averaging about 6% for the past several years has attracted Indian and other multinational firms interested in staking a claim to Africa’s vast mineral and energy resources to the country, still ranked as one of Africa’s poorest.

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