Indrani Dutta

Kick-starts process to enter into alliances with global mining companies

KOLKATA: Coal India Ltd. (CIL) is planning to create a war chest of around Rs. 6,000 crore for the acquisition of overseas assets in 2010-11, a year when its production target may be set at around 460.5 million tonnes. The company which accounts for over 80 per cent of India’s coal production is chasing a target of 520 million tonnes of output in 2011-12, the terminal year of the current Plan when total production is estimated to reach 680 million tonnes as per the original target. Delay in environmental and forest clearances of major projects, hurdles in land acquisition and problems regarding rehabilitation and resettlement are the main factors affecting production plans.

However, delay in procuring heavy earth moving machinery due to court cases has also contributed to tardy production.

Aside from ad hoc imports, CIL is looking to securing supplies by buying assets abroad or entering into strategic partnerships with overseas mining companies for importing coal into the country. Current indications are that India may face an 81-million-tonne shortage of coal by 2011-12. Of this, 40 million tonnes is coking coal and the balance is non-coking coal. This gap will have to be met through imports.

The coal behemoth has begun looking for assets abroad making a breakthrough in Mozambique where it had already made an acquisition of two blocks spread over a 200 sq. km area. It is on the look out for further acquisitions.

Through International Coal Ventures Ltd (ICVL), CIL is partnering four other public sector units which are also endeavouring to buy coal properties abroad.