New Delhi, July 30: International Coal Ventures Pvt Ltd (ICVL) — a consortium of five PSUs set up to acquire coal assets overseas — managed to make its first acquisition since its inception five years ago, but doubts remain on the quality of the purchase.
ICVL will buy for $50 million the Mozambique coal assets of Rio Tinto, which the Anglo-Australian miner had brought for a massive $4 billion just three years ago from Riversdale Mining Ltd, a company in which the Tata Steel had a substantial stake.
The Mozambique assets have estimated reserves of 2.6 billion tonnes and include the Benga, Zambeze and Tete East mines.
ICVL is a consortium of Steel Authority of India Ltd, Coal India, Rashtriya Ispat Nigam Ltd, NMDC and NTPC.
C.S Verma, chairman of SAIL and ICVL, said, “The Mozambique acquisition by ICVL is a significant and historic development towards assuring long-term coking coal security as Indian steel companies need higher input of raw material to fuel their growth.”
The assets are located in the prime coking coal bearing region of Moatize, which is the second-largest coal basin in the world after the Bowen basin in Australia, ICVL said.
Benga produces prime hard coking coal and thermal coal. The operating mine has a wash plant and surface infrastructure with potential to expand raw coal production to 12 million tonnes (mt) per annum from 5mt per annum.
“There is significant potential for tapping coal bed methane from the acquired coal resources,” ICVL officials said.
In 2013, Rio Tinto sacked its chief executive and other executives directly involved in the acquisition of Riversdale and wrote off about $3.5 billion of the purchase price, partly owing to a failure to secure a permit to move coal by barge down Mozambique's Zambezi River.