NMDC to spin off coal operations into JV

Public sector diversified mineral resources company, NMDC, will spin off its thermal coal operations into a separate company and induct a joint venture partner.

Sources close to the development said that there could be multiple deposit-based joint ventures, where NMDC would have a majority share.

NMDC has been allotted two blocks in Madhya Pradesh and is expecting allotment of a coal block in Birbhum, West Bengal, which happens to be among the five largest coal deposits in the country with estimated reserves of two billion tonnes.

For NMDC, this was a new venture as the public sector essentially deals with iron ore, but was also involved in a wide range of mineral exploration.

NMDC happens to be India’s single largest iron ore producer and exporter with a production of 30 million tonnes from its Bailadila deposits in Chhattisgarh and Donimalai in Karnataka.

In the Birbhum deposit, NMDC owns 50 per cent, West Bengal Mineral Development & Trading Corporation owns 40 per cent and another 10 per cent would be with West Bengal Power Distribution Company. However, NMDC has the right to dilutethe equity up to 15 per cent.

The Deocha-Pachami block in Birbhum covers 9.7 square km. The other two blocks in Madhya Pradesh were smaller. A joint venture would mean that the investment would be shared, explained sources. NMDC has entered into a spate of joint ventures in the past year.

NMDC has a joint venture with Rashtriya Chemicals & Fertiliser for rock phosphate mining. NMDC has a memorandum of understanding (MoU) with Rio Tinto, the world’s second largest diversified mineral resources company, for a joint venture aimed at developing mines in the domestic and international markets.

The public sector miner has another MoU with Spice Minerals and Metals, part of the Spice Energy group, for a joint venture.

Earlier this year, NMDC floated a global tender for joint venture participation in mining activities, which evoked response from 35 companies, of which six were foreign bidders. Also, 12 companies happened to be from the steel sector while 19 were from the mining sector.