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Prism Cement awards Rs 1,200-crore contract to Perth-based India Resources

The Economic Times:  October 04, 2011

Kolkata: Prism Cement has awarded Perthbased India Resources a Rs 1,200-crore contract to develop a captive coal mine, underscoring a growing trend of Indian companies outsourcing their mining operations to foreign entities.

India Resources (IRL) will develop and operate the first phase of BSE-listed Prism's Sial Ghogri coal deposit in Madhya Pradesh's Chhindwara district for 30 years. The mine, which is expected to produce some 9.06 million tonnes of coal, was awarded to Prism for its cement plant at Satna.

IRL, which is listed on the Australian Stock Exchange, specialises in exploration of various metal groups in India. It first entered the country's growing mining services market in 2007 by winning a deal from state-owned Hindustan Copper to mine at Surda, Jharkhand. It has also been shortlisted to operate HCL's Rakha mines.

At Sial Ghogri, IRL will construct all necessary infrastructure linked to the mine's development within 24 months.

"It is a major milestone for the company and underpins our growth prospect in the Indian mining industry," IRL managing director Arvind Misra said. Since demand for coal far exceeds supply in India, it has led to local companies with large energy needs to develop and own captive sources of coal. Apart from IRL, the Indian market has also attracted Australia-based Thiess, a large contract coal miner which won a contract for NTPC's Pakri Barwadih coal project.

State-run Steel Authority of India, too, is planning to contract out a few of its mines at Chiria to foreign company. Stipulation of stricter environment norms is also prompting a number of Indian companies such as Prism to seek specialised expertise to firm up mine development plans.

The coal ministry had also determined that the Sial Ghogri block requires specialised skill and technology and asked Prism to appoint a financially sound and experienced agency to develop and operate the coal block.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.