CIL to buy stake in IOC’s explosives unit

Our Bureau Kolkata | Updated on January 19, 2018 Published on February 05, 2016

State-run Coal India Ltd on Friday inked a memorandum of understanding to acquire a 50 per cent stake in IndianOil’s (IOC) bulk explosives business.

Explosives are used in open cast mines, which contribute nearly 93 per cent of CIL’s annual production of over 500 million tonnes.

The focus on quick production growth is set to increase the share of production from open-cast mines in the next few years.

Heavy demand

According to sources, the coal miner will soon appoint a valuer to determine the investment details.

A CIL release said that a joint venture will be floated and efforts are on to operationalise the joint venture by March 2017.

IOC recorded 15 per cent growth in explosives production, at one lakh tonnes, in 2014-15.

This is less than 20 per cent of CIL’s annual bulk explosives requirement of 5.5 lakh tonnes.

IOC acquired the explosives business through the merger of erstwhile IBP with itself in the middle of the last decade.

By end 2007, the company described explosives as a “non-core business” and started exploring means to hive it off.

The inclusion of CIL as a JV partner is in line with this goal.

It is not known if CIL will take management control of the explosives business. Company sources told BusinessLine that control over explosives manufacturing will ensure ready availability of raw material, avoiding the time consuming tendering process.

Published on February 05, 2016
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