ICVL consortium closes in on buying into Australian property

To participate in a binding bid to acquire the property

International Coal Ventures Ltd (ICVL) is closing in on acquiring a substantial coking coal property in Australia. ICVL is a joint venture of five public sector companies — Steel Authority of India Ltd. (SAIL) Coal India Ltd. (CIL), NTPC, NMDC and Rashtriya Ispat Nigam Ltd (RINL).

A meeting of ICVL board held here on Saturday last has decided to take the process forward and participate in `a binding bid' to acquire the property for which a global tender was floated, an official connected with the development told The Hindu .

Signing a binding bid is indicative of substantial progress being made in the process as ICVL would commit itself to acquiring the property if it is selected through the process. “It got shortlisted through a non-binding bid,” the official said, adding that this was this was the first such bid to be made by ICVL. Although officials of the ICVL consortium are tight-lipped, enquiries revealed that the property, comprising a substantial reserve of coking coal, is government-owned.

ICVL was incorporated in May 2009 following the sealing of a memorandum of understanding for setting up a joint venture for acquiring thermal and coking coal properties abroad. SAIL and CIL are the two majority shareholders splitting equally 56 per cent of the equity, with the other three holding the remaining in a 1:1:1 ratio. ICVL has a panel of 10 merchant bankers to help it in its job of sealing a deal, including crucial aspects like due diligence and valuation. It also has technical and legal advisers.

Lack of approach

Success has so far eluded ICVL as it has not been able to make any acquisition so far. With most of the consortium members making bids to purchase overseas properties on their own, there have been allegations of treading on one another's toes or even lack of a collective approach.

Recently, there had been prodding from the government to ICVL to make serious efforts to complete an acquisition. It is now actively pursuing six prospective deals and may seal one soon if things go according to plan.

India's perennial gap in the demand and supply of coal, especially coking coal, is set to widen as the XI Plan production targets have now been lowered on account of a number of obstacles being faced by the coal companies in jacking up production. Thus, the original gap projected at 51.1 million tonnes (coking coal 40.85 and rest thermal coal) has widened to 81.03 million tonnes which will now have to be met through imports. That is a short-term measure.