ICVL can get 2 Russian coalfields

The Russian government-owned coal miner VO Zarubezhugol has offered International Coal Ventures Ltd (ICVL) a stake in its coal mine. The deal, if clinched, is valued at around Rs 850 crore.

ICVL is a consortium promoted by Steel Authority of India (SAIL), Rashtriya Ispat Nigam, NTPC, NMDC and Coal India (CIL). In Kuzbass province, the mine houses two fields of coking coal, one with 71.5 million tonnes and the other with 80 mt of reserves. “Work was halted on these in 2004. Our plan is to sell them off or offer equity partnership, depending on the talks. We wish to finalise the deal before March next year,” Alexey Falin, Director, VO Zarubezhugol, told Business Standard.

A senior ICVL executive confirmed the offer for the mine. “The discussions are in a preliminary stage. If the result is positive, we will start due diligence for acquiring the Russian property,” a top-level ICVL executive told Business Standard, adding the intent was to secure supplies for the top-grade prime hard coking coal, not available in India, for domestic plants.

ICVL has been looking for assets in several countries, including Indonesia, South Africa, Mozambique and Australia, at the back of rising coal import bill of the member-companies. Though it has not succeeded in closing any deal, it recently gave a final bid for acquiring 12 per cent equity in the Grosvenor Coking Coal Mine of mining major Anglo American, located in the Bowen Basin in Australia.

The Russian company had a meeting with ICVL chairman C S Verma, also the chairman of SAIL, earlier this week. “We have given ICVL a capital outlay of $175 million, around Rs 850 crore. Our company has been mandated by the Russian government to bring in investment from India. We are in a hurry,” said Harish Mehta, executive director, India Affairs, of VO Zarubezhugol.

SAIL, the largest steel producer in the public sector, has been battling a rising coal import bill. Global coking coal prices, around $125 per tonne in 2009-10, went up to $212 per tonne in 2010-11. Prices had recently risen up to $300 per tonne.

SAIL has an annual production capacity of 14.1 mt and plans to raise this to 19.5 mt by the end of this financial year. “We meet 70 per cent of our annual coking coal requirement through imports. The rest is sourced domestically. For every dollar increase in coal prices, our coal bill goes up by Rs 45 crore,” said a senior executive.

SAIL and CIL hold 28.5 per cent each in ICVL. The other three members hold 14.5 per cent each. It had recently signed a memorandum of understanding with the Indonesian government for developing mineral assets in Central Kalimantan.