ICVL scouting for takeovers in US, Canada, Indonesia

Faced with an imminent coal shortage of around 200 million tonnes by the end of the 11th Plan, International Coal Ventures Limited (ICVL) - the 5 PSU member SPV- is now scouting for coal assets, properties and mine takeovers in US, Canada and Indonesia.

A delegation consisting of the Union minister of state for coal, Santosh Bagrodia and Coal India chairman, Partha S Bhattacharya was recently in the US looking for such overseas ventures to meet future coal shortages in the country.

There were discussions with 6 merchant bankers - Royal Bank of Canada (RBC), Royal Bank of Scotland (RBS) , UBS, Merrill Lynch, Citi Bank and Deutsche Bank. The focus was primarily on the swift identification of coal properties and assets for utilisation to meet requirements in India by 11th Plan.

" It was a five-day hectic schedule with the merchant bankers in New York who would be doing the job of identifying assets, properties and overseas mines for future ICVL operations", said Bhattacharya. ICVL has already asked10 investment bankers to identify coal properties across the globe.

The demand for coal by the end of 11th Plan will be around 721 million against a targeted production of around 520 million tonnes by CIL. The yawning gap of around 200 million tonnes could either be met through imports valued at around Rs 18,000 crore at current international coking and non-coking coal prices or needs to be sourced in through overseas mine extractions.

The country is already in the grip of a coal crisis and plans to import 20 million tonnes of coal during 2008-09. Power stations have been requested to import coal as per their requirements. NTPC is expected to import 8.2million tonnes of coal shortly.

Says Bhattacharya. " India has enough coal reserves to meet demands for the next 35-40 years, but how much of it can really be extracted with existing infrastructure remains to be judged." The country's current coal reserves are about 235 billion tonnes of which 95 billion tonnes is proven. The coal ministry has allotted 191 coal blocks to different IPPs, state and power utilities estimating an extraction of around 41 billion tonnes.

To meet demands, the overseas arm of Coal India - Coal Videsh is also on the job of identifying overseas coal assets and mines for take over mostly in non-coking coal category. It has identified 5 merchant bankers in doing the job through letters of intent ( LoIs) issued a few months ago.

Taken together, it is now an all round work for the public sector coal enterprise in finding out ways to meet burgeoning coal demands by 2011-12.

The recent 30 per cent dip on the international prices of coking and non-coking coal has also prompted ICVL and CIL authorities in pushing through its search for overseas coal mines. There is a price dip of 30 per cent from $ 160 - $ 200 a tonne on non-coking coal and $ 300 a tonne on coking coal. ICVL and CIL are also on the lookout for coal properties in Australia, South Africa and Mozambique.

Worsening matters CIL has issued Letters of Assurance ( LoAs) to power stations in excess of its capacity to produce. Currently, because of short supply 46 power stations became 'critical' with stocks falling below seven days and half the number 'super critical' with a meagre stock of less than 4 days. The situation is yet to be retrieved.