ICVL sniffs opportunity in falling global coal prices

With a sharp drop in the coking coal prices, International Coal Ventures Ltd (ICVL), a consortium of five major public sector undertakings, is eyeing mines in mineral-rich countries Australia and New Zealand at competitive valuations.

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

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

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

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

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

Verma is chairman of two of these five companies. Besides SAIL, he also heads iron-ore miner 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 around 20 per cent. If I had done it six months back, there could have been inquiries against me".

The ICVL board can take investment decisions of up to Rs1,500 crore. It aims to own 500 million tonnes of reserves by 2019-20.

Several private sector players, including Tatas, Adani and GVK, have acquired assets abroad for strategic resources.