industry

Coal India signs MoUs with Russia for coking coal


KOLKATA: Coal India signed MOUs with two Russian entities in the areas of coking coal mining in the Russian Far East and the Arctic Region.

Coal India signed the first MoU with Far Eastern Agency for Attracting Investments and Supporting Exports (FEAAISE), an autonomous non-profit organization in Russia, for cooperating in their activities for mining coking coal in the Russian Far East and Arctic Region.

The second MoU was signed between Coal India and Eastern Mining Company (FEMC) of Russian Federation for exploring, identifying, sourcing, negotiating and consummating mutually beneficial investment opportunities in the mining sector in the Russian Far East.

The MoUs were signed by Coal India chairman, A K Jha and Leonid Gennadievich Petukhov, director general of FEAAISE and a senior executive at FEMC.

For the last several months Coal India is also looking at acquiring coking coal assets in Russia, Canada and Australia. In fact, it has recently, identified four potential coking and semi-coking coal assets, two each in Australia and Canada, for due diligence. It may acquire minority stake in each of these assets to start with, which may be gradually increased, based on its experience.

The assets identified in Australia are working mines where Coal India is looking at acquiring stakes while the assets identified in Canada are ready to produce blocks where explorations are complete, land acquired and environmental clearances received.

The final decision on the quantum of stake in each of these projects would be based on due-diligence reports. At present, it is in the process of inviting global tenders for appointing merchant bankers for undertaking due-diligence for the two identified assets in Australia. They will render financial due diligence and transaction advisory services for framing asset-specific investment proposal.

Coal India believes it may not be possible to bridge the entire demand gap of coking coal and high-grade low ash thermal coal, primarily because of limited availability of techno-commercially recoverable coking coal reserves and near absence of high-grade low ash thermal coal reserves in the country. This has necessitated overseas acquisitions.

The plan is to set up coking coal and high-grade thermal coal mining business overseas with a view to acquire coal resources, produce coal and import it either by opening new mines or through acquisition of equity participation in working mines on production sharing participation interest basis.

In the past, Coal India had acquired an exploratory block in Mozambique during August 2009. Following preliminary rounds of exploration, it discovered the block did not have good quality reserves and was subsequently forced to give it away.





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