Following an appeal by the steel ministry, the coal ministry has asked Coal India Limited to re consider its decision to pull out of the Special Purpose Vehicle set up by maharatna and navratna PSUs for acquiring coal properties abroad for their firing blast furnaces and power turbines back home.
The International Coal Ventures Limited formed in May 2009 jointly by Steel Authority of India Limited, National Thermal Power Corporation, CIL, Rashtriya Ispat Nigam Limited and National Mineral Development Corporation has a capital base of about INR 10,000 crore and enjoys the powers of a navaratna company. The SPV aims to secure about 500 million tonnes of metallurgical coal reserves by 2019 to 2020. Ever since its formation, the SPV has failed to acquire any overseas coal assets either through bids or through takeovers. This non performance by ICVL has spurred CIL to quit the SPV. The company’s board, while asking the PSU to exit from ICVL, argued that the SPV has not been able to execute any overseas acquisitions despite undertaking due diligence in at least nine proposals.
Besides, after NTPC’s exit from the SPV of the remaining four constituents, three are under the administrative control of the steel ministry and are consumers of metallurgical coal to be sourced through ICVL, whereas the role of CIL in the consortium would be that of a seller.
The PSU said that it is apprehended that the business interest of CIL would be seriously compromised if it remains in the JV Company. But thereafter, the top brass of steel ministry met their coal ministry counterparts several times during the past two months to persuade CIL to stay with ICVL.
Mr S Narsing Rao chairman of CIL said that “Yes, the coal ministry has asked us to re-look at the matter. We will try to look into it but let the ministry take a final view on the issue.”
With the ICVL failing to succeed, its members have begun scouting to execute overseas acquisitions on their own. Mineral giant NMDC went ahead and secured the Legacy Mines in Australia and CIL secured two coal blocks in Mozambique’s Tete province. These individual pursuits by the members are bound to dilute the collective efforts to be made by them under ICVL’s manner.
However, the steel ministry has not been able to infuse any enthusiasm among the SPV members by making them aggressive in their approach. A section of the ministry believes that the SPV’s approach to acquire overseas assets needs a total re orientation.
A top steel ministry official said that “Despite having a huge capital base, ICVL’s constituents have been extra cautious in their approach and are averse to risk taking in bidding for overseas mines. We have asked the SPV to re model its takeover approach and be more competitive. First, ICVL lost out the bid for Stanwell mine in Australia in July last year and thereafter the bid for Tavan Tolgoi coal mine in Mongolia in May.
Source - Indian Express.com
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