Coal India seeks allies to unlock 1.6 billion tonne

Coal India’s attempt to reopen 18 abandoned mines and start new underground mines through partnerships flopped as none showed interest.

India’s most valuable company is not giving up. It is working on a revised limited tender document with softer conditions, and if that fails too, global tenders would be floated, chairman NC Jha said.

In 2008, CIL first sought expression of interest from global mining giants to reopen 18 abandoned underground mines owned by three of its subsidiaries — Eastern Coalfields Ltd, Bharat Coking Coal Ltd and Central Coalfields — which have reserves of about 1,647 million tonne.

ArcelorMittal, Rio Tinto, Reliance Natural Resources, Sterlite, JSW Steel, Monnet Ispat and Essar Steel were among those responding to the call to revive the mines where work was suspended owing to lack of technology.

A parallel effort to develop underground mines on a turnkey contract basis also drew a blank due to unattractive tender conditions.

Efforts are now on to rework these too.

A special purpose tender document was formulated for developing seven high grade capacity underground mines.
The tenders were issued to shortlisted parties. In the absence for any response from the parties, subsidiaries were advised to reframe tender documents to make them more attractive to bidders and go for open global tender.

Jha said in his address to shareholders on Saturday that one subsidiary has been able to finalise bids for four underground mines.

Bharat Coking Coal chairman T K Lahiri recently told DNA the company has awarded contracts for these four mines to foreign mining companies under mine developer and operator model and plans to invite partners for another 6-7 mines soon.

Overseas, efforts are on to acquire further mines in Mozambique via its existing wholly owned subsidiary Coal India Africana Limitada.

The subsidiary plans to start shortly drilling and exploration in the leasehold area over 22,400 hectares for which tenders were floated in February. Bids from interested parties, the letter said, are being evaluated.

Jha said CIL is examining and evaluating 19 proposals from 5 companies in response to a global expression of interest for contract for long-term offtake of coal floated earlier while offers are being made to acquire coal blocks overseas.

“After an initial due diligence in association with technical consultants and merchant bankers of identified coal assets in Indonesia, Australia and US, non-binding indicative offers were sent to selected companies,” Jha said in the letter.