Essar Ports seeks shareholders’ approval to invest in Mozambique’s Beira coal terminal

Essar Ports has sought the approval of its shareholders to invest up to $25 million (about ₹150 crore) in a joint venture, which plans to develop a coal terminal at the Beira port in Mozambique.

The investment will be made for developing the terminal with 10 million tonne (mt) a year capacity and also to provide a corporate guarantee of up to $10 million on behalf of the joint venture, the Essar group firm said in its notice to the shareholders. Their nod has been sought through postal ballot.

“Resolved that pursuant to Section 372 A and other applicable provisions of the Companies Act, 1956...approval of the company be and is hereby accorded for investment in New Coal Terminal Beira (NCTB) either directly/through a subsidiary/an intermediate company for an amount not exceeding $25 million.”

NCTB is a joint venture between Essar Ports (70 per cent stake) and the port and rail authority of Mozambique (known as Caminhos de Ferro de Mocambique). The venture has been specially created to develop a multi-user coal terminal at the Beira Port with a capacity of 10 mt a year.

The capacity can be increased by 10 mt in case of availability of cargo.

NCTB has already secured a letter of intent from the ministry of transport and communications of Mozambique granting a long-term concession for the development of this terminal on a DBOOT (design, build, own, operate and transfer) basis.

“The initial investment in the project would be around $25 million. The Government of Mozambique requires NCTB to furnish a bank guarantee, which is the signing and commencement of works guarantee,” Essar said.

The coal deposits of the Moatize region of Mozambique are estimated to be around 27.6 billion tonnes, 3 per cent of the world’s estimated total coal reserves of 984 billion tonnes. The size, quality and a high projected recovery rate (95 per cent) of this deposit have attracted mining giants such as Rio Tinto and Vale.

Hence, availability of cargo for the terminal will not be a challenge, the company said, adding the project will enhance the shareholder value and give a boost to third party cargo.