NMDC, Tata Power in coal mining pact

NMDC Ltd, the iron ore miner, has entered into an agreement with Tata Power to take forward its coal mining plans.

An agreement with Tata Power was signed in Hyderabad on Friday though the officials of NMDC maintained that this was preliminary. 

“The basic premise of the agreement is sharing of coal blocks and providing the NMDC’s expertise in mining to Tata Power,” a senior official of NMDC told DNA Money.

Though NMDC, too, has certain coal assets, the MoU would not provide for sharing of coal. “NMDC is unlikely to share any coal with Tata Power. Instead, we would extend support for carrying out the mining operations,” he said. However, the agreement paves for the way for setting up of a special purpose vehicle or a joint venture company.

Once formed, the entity would look at joint acquisition of coal assets.

NMDC on its own has been working on coal assets in Madhya Pradesh, Chhattisgarh, Jharkhand, West Bengal and Orissa. It has been working on a plan to have two billion tonnes of coal assets in the next five years.

“NMDC already has an agreement with KSK Energy for coal mining. The agreement with Tata Power is also on the same lines,” the official said.

In fact, sources tracking the developments also said that the agreement would also give NMDC a better understanding on making use of the coal assets.

“Tata Power has been into energy while NMDC is a pureplay mining company. With this MoU, the mining company would also be able to understand the coal utilisation strategy properly and look at making better use of its own coal mines while supporting the coal mining of Tata Power,” the source said.