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Coal India Ltd (CIL) will get into advance agreements with some overseas markets for securing coking coal before going in for asset acquisition.
According to Union Coal Minister Pralhad Joshi, “freezing” the order in advance will help the country secure coking coal at a competitive price.
“As of now, the thinking is not to acquire any assets, it’s only to freeze the order in advance and get the coking coal at a competitive price,” he told newspersons on the sidelines of the 8th Asian Mining Congress and Exhibition here on Wednesday.
Also read: CIL to switch over to mechanised transport of coal at large mines
CIL has been looking for minority stakes in operational coking coal mines in Russia, Canada and Australia. Based on its experience, it may gradually increase its stakes in the mines, following which it may buy them out, and then look for new blocks in those countries.
According to CIL’s latest annual report, following the directives of the board, the company has undertaken initiatives to acquire stakes in coking coal assets in Australia, Canada and the US, which are major sources of coking coal imports to India.
Assets identified
“As an outcome of such initiatives, a few potential coking/semi coking coal assets have been identified in Australia and Canada for due diligence. Tenders have been floated for the selection of investment banker/merchant banker to render financial due diligence and transaction advisory services for framing of asset specific investment proposal,” the annual report said.
The investment banker will be assisted by a technical consultant, legal consultant and tax and accounts consultants. Tenders will be floated in due course for their selection, too, the report added.
Bringing down imports
According to Joshi, the aim is to produce coal domestically. Any shortfall will be met through private investment or FDI. The target will also be to bring down imports to protect forex outflow, he added. “India has the fourth or fifth largest coal reserves but still we are importing. Our intention is to stop imports and enhance domestic production and strengthen CIL, leading to increased production.”
The country imported close to 235 million tonnes of coal last fiscal, leading to a foreign currency outflow of around ₹2.71-lakh crore.
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