Indian JV to acquire Rio Tinto's coal mine in Mozambique

Ranchi: International Coal Ventures Pvt. Ltd.(ICVL), a joint venture of Indian companies SAIL, CIL, RINL, NMDC and NTPC, will acquire Rio Tinto's operating coal mine and coal assets in Mozambique, a move that will bring much-awaited relief to steel making companies in the country.

The acquisition will address the concerns of steel companies for high grade cooking coal.

The mine produces prime hard coking coal and thermal coal.

The agreement for acquisition was signed on July 28 in New Delhi by CEO IVCL Ajay Mathur and director M&A, Rio Tinto George Hartley, in the presence of chairman SAIL and IVCL CS Verma.

Investec Bank PLC, London, was the financial adviser to ICVL in this acquisition.

An official communique in this regard was issued by the SAIL headquarters in Ranchi on Wednesday.

"These coal mine and assets were acquired by Rio Tinto from Riversdale Mining Ltd. in 2011," said chief of communication, SAIL, Ranchi, Ujjwal Bhaskar.

Since then, the coal mine at Benga has been brought to production.

"The coal resource will become a long-term captive source of a critical raw material in steel making in geographical proximity to India. The coal mine and assets are located strategically in the prime cooking coal bearing region of the Moatize Coal Basin which is stated to be the second largest coal basin in the world after the Bowen Basin in Australia," he said.

"The operating coal mine comes with a state-of-the-art wash plant and surface infrastructure with a potential to expand raw coal production from the current 5 Million tonnes per annum (Mtpa) to 12 Mtpa.There is significant potential for tapping CBM from the acquired coal resources," Ujjwal Bhaskar said.

Bhaskar further informed that the assets acquired by ICVL include Benga (65%) and the Zambeze (100%) and Tete East greenfield coal assets which have substantial resource of coking coal.

ICVL, had been scouting for coal mines and assets since its inception in 2009.

"With this large acquisition, long term security of supply of a critical raw material for the steel industry is ensured," he said.

SAIL and RINL are both increasing their capacity to 23 Mtpa and 6.3 Mtpa respectively. Their requirement of coking coal would increase to a level of about 25 million tonnes by 2015. Besides, NMDC is in the process of setting up a 3 Mtpa capacity integrated steel plant at Nagarnar in Chhattisgarh.

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