CIL to start exploration of Mozambique coal blocks in six months

Coal India Limited (CIL) which was recently awarded two exploratory coal bocks in Mozambique, hoped to commence exploration work within six months, a highly placed CIL official told Business Standard.

“CIL is in negotiations with the Mozambique government for carrying out exploration work on the two coal blocks. CIL would forge a joint venture (JV) with the Mozambique government for exploration of the coal blocks. In the JV company, CIL will have 85 per cent stake while the remaining 15 per cent will be held by the Mozambique government”, said the CIL official.

CIL needed exploratory license to kick off exploration work. Earlier this month, the navratna coal PSU (public sector undertaking) was awarded two coal blocks-A1 and A2 in Tete province of Mozambique with an estimated reserves of one billion tonnes.

CIL was also to spend Rs 100 crore towards distributing artificial limbs in the war ravaged country, creating a mine technology hub and setting up an institute on the lines of the Indian Institute of Mines, Dhanbad, to create a pool of mining professionals in Mozambique.

Asked on the plans of CIL to examine the viability of 77 out of 127 projects in the 11th Five Year Plan, the official said, Central Mine Planning and Design Institute (CMPDI), a fully owned subsidiary of CIL would prepare a report on the viability of the 77 projects within two months.

CIL had asked its fully owned subsidiary- CMPDI to examine the viability of 77 projects on account of the implementation of the National Coal Wage Agreement-VIII.

According to the National Coal Wage Agreement-VIII, the wages of over 4 lakh employees of CIL and its eight subsidiaries would be revised and this means a financial burden of about Rs 1,800 crore on the coal PSU. The report from CMPDI on the viability of the projects is expected within a month.

Besides, there would be an additional burden of Rs 500 crore because of the rise in salaries of CIL officers which has already been notified.

There was a possibility of CIL missing its targeted production of about 520 million tonnes (mt) by the end of 2011-12 as the viability of 77 projects was being examined.

CIL has recorded a production of 316.45 mt during April-January of 2008-09, a 7.1 per cent growth over 295.37 mt posted in the corresponding period of 2007-08. It was aiming at a coal production of 405 mt by the end of 2008-09.