After forming a fully-owned subsidiary in Mozambique for exploration of two coal blocks and appointing merchant bankers for conducting due diligence of coal assets in Indonesia and Australia, Coal India Limited (CIL) is now eyeing coal properties in the US.
The coal major, which had intensified efforts for acquisition of overseas coal assets in the past few months, is in talks with coal miners in the US for a possible tie-up.
“We are negotiating with US coal mining firms. They have responded to our global expressions of interest (EoIs). The modalities for the partnership are yet to be finalised. CIL may either go for outright purchase of operational coal mines or pick up certain equity in US mining properties,” CIL Chairman Partha S Bhattacharyya told Business Standard.
The CIL chairman had recently visited the US to discuss possible collaborations with coal miners in that country. Though Bhattacharyya declined comment on CIL’s import targets, sources said the Navratna coal company aimed to import around 50 million tonnes of the fossil fuel from different overseas locations by 2016-17. CIL had earmarked an investment of $1-1.5 billion for acquisition of overseas coal assets.
As many as 52 global mining firms, especially from countries like Australia, Indonesia and Mozambique, had evinced interest in entering into a strategic partnership with CIL in response to its global EoIs.
CIL had appointed the Royal Bank of Canada to conduct due diligence of a few identified coal properties in Australia. The coal major was also being advised by four to five merchant bankers on acquisition of coal assets in Indonesia. CIL was looking to expedite the process of acquisition of coal assets abroad to plug the demand supply shortfall in the domestic market. As against the projected demand of 730 million tonnes (mt) of coal in the country by 2012, the production was pegged at 520 mt, thereby leaving a shortfall of over 200 mt.