ICVL to invest $300m in Mozambique mine

INTERNATIONAL Coal Ventures Ltd (ICVL), comprising state-owned firms Steel Authority of India (SAIL), Rashtriya Ispat Nigam (RINL), National Minerals Development Corp (NMDC), Coal India and NTPC, will invest $300 million for expanding coal production at the Benga mine of the Mozambique assets it has acquired from Rio Tinto as it initiates a formal dialogue with Tata Steel that holds...

35 percent in the venture. The PSU consortium bought the assets for $50 million from Rio Tinto, which had got them via a $4 billion acquisition of Riversdale Mining in 2011.

International Coal Ventures Private Limited (ICVL) is a recently promoted special purpose vehicle (SPV) with proposed equity base of $0.9 billions debt $1.8 billion funds from private equity funds, venture capitalists, etc as required.

"The Benga mine currently produces five million tonnes per annum and our first priority is to ramp this up to 11-12 million tonnes in the next three to four years and to 16 million tonnes over the next four to five years. For this, we will invest around $300 million for the expansion in the output," ICVL chairman CS Verma, who is also the chairman of SAIL said.

Though a detailed project report (DPR) is yet to be outlined there are various options before it and these include contract mining or going in for mining development cum operations (MDO) agreement. These details will be sorted out as we move forward.

Apart from Benga, the ICVL has also acquired Zambeze and Tete East greenfield coal assets with resources of 1.96 billion tonnes and 260 million tonnes respectively.

He said a team of 25-30 people will be sent to Mozambique to take over the operations.

Verma said that the first shipment from the Benga mines could reach India by December this year and the landed price may be cheaper, to the price it pays for coal imports.

Out of SAIL's estimated 16 million tonnes coking coal requirement currently, around 11 million are sourced through imports, around three to four bought from domestic producers and 1 million through the company's captive mines.

Asked whether ICVL is scouting for new acquisitions, Verma said the consortium is always open to good opportunities. "Our ears and eyes are open." He said the countries where potential acquisitions can be made include Australia, Indonesia, US and Mozambique.