Having created a storm with a number of exciting business proposals requiring business tie-ups with private sector majors from India and abroad during the last three years, its time for Coal India to enter a lull.
Almost all of its ambitious projects ranging from re-development of 18 abandoned mines, long term off-take of coal from abroad, acquiring assets overseas, developing under ground coal gasification (UCG) projects through private participation, engaging CBM (coal-bed-methane) operators for degasification of mines and many others appear to have either fallen through or far from the take-off stage.
To make the matter worse, the Government is yet to appoint at least two full time Directors on board including the Chairman and the Director (marketing).
No progress
Talking to newspersons after the first annual general meeting since IPO in 2010, Mr N.C. Jha, Director (technical) and acting Chairman, could not hide his hopelessness on the lack of progress on frontiers once considered to take the company to newer heights.
The prospect of acquiring interest in mining asset is hanging fire, as the Union Government is yet to respond to company's plea in June this year to relax the viability benchmark of 12 per cent internal rate of return (IRR). “We are awaiting a few clarifications from the Government to go ahead on offers to buy equity stake in foreign assets,” Mr Jha said on Tuesday.
Import contracts
The much-hyped plan to import coal through long-term contracts had also hit a damp patch as all the miners from Indonesia, Australia and South Africa shortlisted through a bidding process have asked for bonus over and above the index price. “This is against our expectation to get a discount,” Mr Jha said.
Though some US-based miners wanted to offer discounts (on index), sources suggest that in view of the steep freight considerations, the landed price of such imports may not be lucrative to Indian buyers.
Redevelopment snags
Despite keen interest from companies like ArcelorMittal India, Rio Tinto, and others, the proposal for re-developing 18 abandoned mines through joint ventures has also suffered a set back. “There were no participants in the first round of the bidding. The reasons, I feel, are primarily because the tender document said that coal from these mines needs to be sold to us at 90 per cent of the notified price for underground mines. Considering the quality of coal and the risk of investment, they may not have found the offer attractive,” Mr Jha said.
“We do not hold much hope for re-development of abandoned mines,” an official said.
Meanwhile, a heavy rainfall in August and September has impacted the production of the company. “Production was down by 17 million tonnes from the targeted quantity till August,” Mr Jha said.