The Hindu Business Line : CIL, SAIL plan venture to buy coal mines abroad

STEEL Authority of India Ltd (SAIL) and Coal India Ltd (CIL) are planning to set up a joint venture company for acquiring coal mines abroad. The move aims to end the perennial shortage of coking coal and low ash non-coking coal in the country.

The Coal India board has already cleared setting up of CIL Videsh as a wholly owned subsidiary of CIL with a proposed equity base of Rs 100 crore. "Initially, it would be Rs 100 crore, but we would be investing as much as required," the CIL Chairman, Mr Sashi Kumar, told Business Line, and added that initial talks with SAIL had taken place earlier this week.

CIL would be looking at Indonesia, Mozambique, South Africa and Australia for good mines, Mr Kumar said. He said that CIL may not directly form a joint venture company with SAIL, but will do it through the subsidiary, CIL Videsh.

Earlier, SAIL and CIL were independently planning to acquire coal mines abroad. SAIL is searching for mines to ensure assured supply of coking coal throughout the year because India does not have the necessary grades of coal that is required for steel plants. The company had to cut down production last fiscal due to shortage of coking coal.

Sources said that earlier this year an attempt by SAIL to acquire a particular mine failed because the company was not able to undertake a proper due diligence exercise as it does not have the necessary expertise in coal mining.

On the other hand, the CIL Videsh, which is being set up following the ONGC Videsh model, had been planned during the NDA regime.

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