Digging deep

Calcutta, Jan. 1: Central Coalfields Ltd (CCL), a subsidiary of Coal India, is tying up Rs 2,053 crore to fund its two open cast coal mines in Magadh and Amrapali. Both mines will have annual production capacities of 12 million tonnes each.

?CCL has been in talks with a consortium of 18 banks, led by State Bank of India, to fund 50 per cent of the cost. The rest will be generated internally,? company finance director A. K. Sarkar said.

?We have broadly agreed to take the loan on a term-lending basis. However, we may float bonds also. For this, we will have to take the government's approval,? he added.

The Magadh project will cost Rs 1,053 crore and Amrapali Rs 1,000 crore. Sarkar said Jharkhand would stand to gain substantially once the two projects are established.

The company will supply the coal to National Thermal Power Corporation Ltd (NTPC) for its two 2000-megawatt super thermal power plants that are coming up in Tandwa in Jharkhand and Barh in north Bihar. NTPC will require about 20 million tonnes of coal annually to run the two plants.

Earlier, NTPC had said the plants will be commissioned in 2006-07. However, in February, the corporation postponed it to 2009-10, he said.

The two projects are important for CCL because of their size and the targeted sales revenue. There are few mines under Coal India's belt with an annual production capacity of 12 million tonnes and above.

?These two mines are expected to generate an annual sales revenue of Rs 1,300 crore at today's market price,? said Sarkar.

The mines are expected to start production from 2009-10. NTPC will start taking 1.2 million tonnes of coal from 2009-10.

CCL will start with an initial production of 1.5 million tonnes, which will go up to 12 million tonnes in four years. ?Hence, we will be able to synergise our production with NTPC?s requirement,? said Sarkar.

The proposal to set up the mine in Magadh has been cleared by the CCL board and subsequently by Coal India. It is now awaiting the coal ministry?s approval. ?It is in the advanced stages of approval and we expect it by this fiscal,? Sarkar added.

However, the ministry has cleared the advanced action proposal following which CCL has started acquiring land for the two projects. The Magadh mine will be spread over 1,750 hectares and Amrapali over 1,250 hectares.

For the Amrapali project, CCL will not have to seek Coal India's nod, said sources. It has been cleared by the CCL board and will soon be sent directly to the ministry. Concurrently, the proposal will be sent to Coal India for its views.