While concerns are rising on the future of Coal India’s (CIL’s) Mozambique plans, the world’s largest coal producer has expressed confidence that it would be able to meet the deadline set by the Mozambique government to develop two blocks in the Moatize region in the northern part of that country.
The company will invite fresh bids for exploration within a month, after the earlier bids got cancelled. It expects to start work by the end of this year.
The blocks were awarded to CIL in 2009 and the local government had set a time line of five years till 2014 for the company to develop it. But even after two years of allotment, the firm failed to start exploration activities, raising anxiety from some quarters. CIL had cancelled all the three bids received for exploration of the blocks, which was supposed to start this month.
When asked about this, Phalguni Guha, chief general manager of Coal Videsh, the CIL arm which scouts for coal assets overseas, said, “A fresh tender would be invited within a month. Based on that, a new agency would be appointed within five months and exploration is expected to start by the end of this year. We have enough time to conclude the activity within the allottted period of five years.”
However, this seems to be a difficult prospect for the company as exploration activities may take close to three years to get completed. “Whether CIL would be able to meet the deadline in two years, provided it starts drilling by the end of this year, is still a question. With the kind of infrastructure available in that country, production without the extension of deadline seems to a difficult task to meet,” said an official source close to the development.
According to reports, three companies — Mining Associates , Indu-CBS Joint Venture and Kartikeyan Pvt Ltd — had shown interest but the bid was cancelled because of certain procedural default. “We wanted the earnest money deposit in dollars, but somebody submitted it in Indian rupees and others in cheque. With only one company left, we had to cancel it and invite a fresh bid,” Guha added.
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The two exploratory blocks — A1 and A2 — were allotted to the company by the local government and A1 block is estimated to have reserves of over one billion tonne, including thermal and coking coal, covering an area of more than 224 square kilometres. CIL plans to invest $400 million, if viable deposits are found, and was planning to import 10 million tonnes of coal in 10 years. In January, the Mozambique government had denied more blocks to the Indian firm stating that it has to first exploit the two block allotted. With the process of developing the mines getting delayed, further blocks seems to be a distant possibility.
Speaking on the infrastructural issues, he said, “RITES and IRCON are already involved in a railway line connecting the blocks to Beira port. The local government has plans to connect the region, which has mines of several international companies, to another port called Nacala through a new railway line.” However, he made it clear that the company had no plans to participate in developing railway line or ports in that country. After the drilling, the company would look at the feasibility on whether production would be economically viable or not, he added.