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01-05-2010, 12:54 AM #1
Coal India Ltd. (CIL) Awarded With Two Coal Blocks In Mozambique
As per recent development, state run Coal India Limited (CIL) has been awarded with two major coal blocks by the Mozambique government. This was informed to the cabinet recently. But, the Indian company has yet to nominate a local entity for partnering in this project.
As per the government sources, CIL has to figure a joint venture with a local partner for the mentioned concessions, A1 and A2. Then the combined group has to shed 15% equity in favour of the government. The minimum level of the equity would be 10%. The corporation will have to train the main power in Mozambique’s capital by opening an office there.
According to government's instruction, for Block A1, Coal India will make a deposit of $2.1 million, which will be refundable. Similarly, it has also to pay $950,000 during the first five years of coal exploration phase and $15.25 million later during the mining phase.
For Block A2, the refundable deposit has been fixed as $620,000, $330,000 in the exploration phase and over $5 million after five years of exploration.
Earlier, CIL won the bid from nine other bidders, while two bids each from the UK and China were disqualified. There were a total of four Indian bidders in this process.
The block A has an area of 109 sq km and Block A2 115 million. Preliminary studies show that, about 20% of the coal deposits are coking coal and the rest is expected to be of good quality coal favourable for power plants.
CIL, which is a $6-7 billion company, aims at exploring about 20-30 million tonnes of coal from overseas. It can also pile up the equal amount from the domestic sector.
CIL is also in the process of partnering with several global majors and accordingly, a list of 12 global firms, including Peabody (US) and Bumi (Indonesia). CIL is also looking for other alternative models to bridge the price gap and tackle the price volatility.