The Hindu Business Line : Mercator Lines targets 30 mt from Mozambique coal mine

Mumbai, June 10 Mercator Lines, India’s second largest private shipping company, has targeted production of 30 million tonnes (mt) of coal from its Mozambique mine once its starts production. The mine has estimated recoverable reserves of one billion tonnes.

But the date of actual production is still some time away, and sources say it is expected to kick off in 2010.

“We are still carrying out feasibility studies to develop the infrastructure needed. It will take us some time as it is a large asset and we a need lot of investments to produce 2.5 million tonnes every month,” Mr H.K. Mittal, Chairman, Mercator Lines, told Business Line.

Without offering the financial details, he reiterated that the company had enough funds for the project.

Mining sector foray

Mercator recently entered the coal mining sector by acquiring three mines in Indonesia and one in Mozambique as part of its backward integration initiative.

“We were into transportation and handling of coal. So we decided to get into coal mining,” said Mr Mittal.

The company plans to produce 1.5-2 mt of coal this fiscal from its Indonesian mines which started production a year ago.

“We have started with small mines to get the experience and will, in the future, ramp up production to 10 mt,” he added.

Mercator reported income of Rs 76.90 crore from its coal mining business in 2008-09, its first year of operations.

Freight revenue

According to a shipping analyst, with the global freight market remaining dampened, these businesses will de-risk the company’s earnings from the cyclicality related to shipping freight revenues.

“This will provide revenue generation through sale of coal in domestic/international markets and its transhipment through its own ships,” he said.

The Mercator Lines scrip closed at Rs 66.50 on the BSE on Wednesday.

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