Drop in global coal asset valuation, ICVL sees opportunity

Firms carrying out due diligence in Australia, New Zealand, Mozambique have signed non-disclosure agreements

With sharp drop in coking coal prices, ICVL, a consortium of five major PSUs, is eyeing mines in mineral-rich countries like Australia and New Zealand at competitive valuations.

"Valuations have come down. This is the time, we should venture out. We are carrying out due diligence in Australia, New Zealand and Mozambique. We have signed non-disclosure agreements," International Coal Ventures Ltd (ICVL) Chairman C S Verma told PTI.

In fact, Verma is expecting further fall in coking coal prices contending that the present prices even after 30% decline since 2010, are not sustainable as demand from China - a major coal consumer- has come down.

ICVL, which was formed in May 2009, wants to be ready with the spadework so that it can go for acquisitions when a right opportunity arises.

"As and when there is a good opportunity, money is not a problem. But, we should have a good proposal. Valuation has come down. ICVL is trying to take advantage of the lower price scenario," he said.

Aimed at acquiring coal mines abroad to meet the growing domestic need, ICVL was set up as a joint venture among five state-owned firms with SAIL and Coal India Ltd, each holding 28% stake and RINL, NMDC and NTPC with 14% each.

Verma is Chairman of two of these five companies. Besides SAIL, he also heads iron ore miner - National Mineral Development Corporation (NMDC).

Asked why the ICVL could not acquire a single asset abroad in the last three years, its Chairman said, "It's a God-sent blessing that we did not hurry things and acquire any asset. Coal prices have fallen. Valuation of assets has also come down by around 20%. If I had done it six months back, there could have been inquiries against me".

ICVL Board can take investment decisions up to Rs 1,500 crore on its own. It aims to own of 500 million tonne reserves by FY20.

Several private sector players, including the Tatas, Adani and GVK groups, have already acquired assets abroad for strategic raw material.