CIL coal import deal to take 5 more months

Coal India Ltd’s says it has got a disappointing response from foreign companies to its invitation for a long-term offtake deal.

The world’s largest coal producer, owned by the Union government, finally got offers from five major international companies to its invitation for supply bids. “Though some are workable, most are not lucrative enough. They are under evaluation and it will take five more months to finalise the deal. We wanted further discounts and have not received that much,” said N C Jha, chairman and managing director.

The Maharatna company had invited expressions of interest (EoIs) from global companies at a discounted price for the long-term offtake agreements early this year. It received 27 proposals from 16 companies. These were then asked to give proposals on the quality and quantity to be supplied to CIL. Five companies gave firm offers by the closing date of May 25. According to sources, among the companies which gave EoIs were global coal majors Rio Tinto, Xstrata, Peabody, Massey Energy and Sinarmas. The deal would be to import coal from four countries — South Africa, Australia, Indonesia and America.

CIL wanted to start import this financial year. Jha said there needed to be a back-to-back agreement from its consumers to go ahead with the offers; the company would go ahead with some (supply) offers if the buying parties agreed to the rate. It is reported that one of the prospective buyers, NTPC, has reportedly retreated from earlier plans to source coal from CIL. When asked, Jha said, “It was a verbal offer and once we sign the long-term offtake deal, we will approach NTPC. If they are not ready to take it, we will look for another buyer.” CIL currently supplies about 125 million tonnes to NTPC annually.

On its acquisiton plans abroad, sources indicated these were yet to be cleared by the finance ministry. “The coal ministry has sent a proposal to the finance ministry and it is yet to receive a response on this,” a company official said.

It was reportedly in talks with Indonesia’s Golden Energy Mines and US miners Massey Energy and Peabody Energy for assets in Indonesia, the US and Australia.