The Hindu Business Line : ‘Coal India venture lost Mozambique block due to procedural delays’

Kolkata, May 6 Delay in decision making has cost Coal Ventures International (CVI) – an SPV of Coal India, SAIL, Vizag Steel, NTPC and NMDC – the opportunity to acquire a coal block in Mozambique. The SPV has already created $2.7-billion fund to acquire thermal and metallurgical coal assets abroad. Mozambique is primarily a destination for thermal coal assets.

In January, a high level CVI delegation visited Mozambique for due diligence of two coal assets on offer. The due diligence was over in February. One of the blocks offered were found having “commercially exploitable coal reserves”. Further technical evaluation of the identified asset was carried out in February for due decision-making by the joint venture.

According to a source close to CVI, though the quality of the asset identified was not of the highest order, it was the only opportunity available to the joint venture so far.

“However, before the joint venture could even firm up its plans on the available opportunity, the asset was taken over by a Mozambique-based company,” the source added, referring the normal procedural delays in decision-making in PSU sector.

According to sources, to make up for the lost opportunity, Coal India is planning to send a team comprising representatives from its subsidiary Central Mine Planning and Design Institute Ltd (CMPDIL) to explore further opportunities in the African country.

Confirming the proposed visit a CIL source told Business Line that the team would explore fresh acquisition opportunities in Mozambique for further action either by Coal India or Coal Ventures. CIL and SAIL hold controlling 28 per cent stake each in Coal Ventures.

Meanwhile, senior officials of the joint venture has met a number of investment bankers in Kolkata during the last two days for creating a panel of such bankers for helping it acquire coal assets in Australia, Canada, the US, Indonesia, Mozambique, Zimbabwe, South Africa and others.