ICVL to conduct due diligence on overseas coal assets

International Coal Ventures Ltd (ICVL), a special purpose vehicle (SPV) floated by five Indian PSUs to acquire coal assets abroad, will soon conduct due diligence on 1-2 identified properties.

The SPV has identified some coal assets in US, Australia and Mozambique for a possible acquisition.

"ICVL has identified a few coal properties in US. We have also identified some coal mines in Australia and Mozambique. ICVL will soon do a due diligence on 1-2 coal assets”, said C S Verma, chairman and managing director, Steel Authority of India Ltd (SAIL), who is also the chairman of ICVL.

Stating that the time was most opportune for the acquisition of coal properties abroad, Verma said, “Valuations of overseas coal mines have come down drastically. The market capitalisation of coal companies abroad has also eroded. This is the right time to acquire coal properties overseas.”

ICVL, which was floated in 2009 with equity participation of four public sector behemoths- SAIL, National Thermal Power Corporation (NTPC), Coal India Ltd (CIL), Rashtriya Ispat Nigam Ltd (RINL) and National Mineral Development Corporation Ltd (NMDC), is yet to acquire stake in any coal mine abroad.

NTPC and CIL are understood to have pulled out of the consortium though there is no word on it officially.

The consortium had the mandate to acquire both coking and thermal coal assets.

Recently, a Union steel ministry panel has suggested delegating more powers to the management of ICVL to enable it to take speedy decisions on acquiring coal assets abroad.

"The management will have to be delegated with powers to decide quickly on merchant bankers and due diligence,” the panel, constituted for rationalising the procedure for import and optimising the use of coking coal, stated in its report.

It also recommended that the procedures to choose agencies that do legal, technical and financial due diligence while evaluating the suitability and value of the projects need to be simplified.

ICVL is empowered to make investments up to Rs 1,500 crore. For proposals exceeding that, it needs to take approval from an empowered committee of secretaries.

Besides, the panel suggested that the government should provide a sovereign or overseas acquisition fund to develop infrastructure such as ports and railroads especially in countries where these have been a bottleneck for acquisition.

"Since the assets on offer are limited, there is a need to broadbase the operations to all potential countries and set up a separate cell for each project so that the studies can be expedited”, it stated.