International Coal Ventures Limited, or ICVL, was the epitome of India’s babudom running public sector undertakings (PSUs). Five major public PSUs — NTPC, SAIL, NMDC, Coal India and Rashtriya Ispat Nigam (RINL) — with a war chest of Rs 10,000 crore had come together for this initiative to buy coal blocks outside the country. However, since its inception on May 20, 2009, the venture has failed to acquire even a single asset. And, two of its integral members, Coal India and NTPC, have clarified they aren’t interested in being a part of ICVL any more.
The latest blow came when it was reported NMDC was also looking to exit the venture. However, NDMC denied this, saying it continued to be a part of ICVL.
It is not difficult to figure why ICVL hasn’t worked. Ritesh Shah, metals and mining analyst, Espirito Santo Securities, says, “Regulatory issues are the biggest hurdle for the joint venture. Clearly, there are delays in seeking approvals from the different ministries involved — steel, power and mines.”
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Former Coal India managing director Partha Bhattacharya told Business Standard, “I don’t think there was any issue in decision-making with ICVL. We took definite calls on assets and the amounts we could spend to buy those.”
Repeated calls and messages to SAIL chairman C S Verma remained unanswered.
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In a presentation to the power ministry, NTPC pointed at the clash of interests as the reason why it decided to part ways, saying it needed thermal coal for its power plants, while the steel companies in ICVL — SAIL and RINL — sought coking coal. A similar issue has plagued Coal India.
NMDC and Coal India are under the mines ministry, NTPC is under the power ministry and SAIL and RINL are under the purview of the steel ministry. “Five companies belong to three different ministries. I think that system doesn’t work,” says Bhattacharya. A senior official from a company that is part of ICVL said, “There wasn’t much pay-off for certain companies. SAIL and RINL needed met coke, while NTPC and Coal India did not need any of it.”
In March, Zohra Chatterjee, additional secretary in the Ministry of Coal, had said, “There is a question mark on the shape of ICVL — the partnership and how it would continue. NTPC has opted out. We need to see whether to go together in the form of several PSUs forming a venture, or whether the steel ministry needs to go it alone.” Chatterjee had said the company would function better if governed by a single board.
Shah of Espirito Santo says, “Look at the success rate of Indian companies that have successfully bought and managed mines abroad. The number is very little. Apart from Tata Steel in Canada and Mozambique, no other name comes to mind.”
Bhattacharya, too, believes ICVL’s intent was never doubted. He says, “Every decision required time for approvals within the ministries and the companies. But the intention was right. We did take definite decisions regarding asset buys.”
The closest ICVL came to action was in 2010, when it ‘thought’ of bidding for Riversdale Mining, Australia. NMDC was interested in acquiring a 10 per cent stake in Riversdale, as it was interested in the company’s African mines.
However, on December 13, 2010, Rana Som, then chairman and managing director of NMDC, had told this newspaper bidding for Riversdale was outside the capacity of NMDC and, therefore, he had referred the matter to ICVL. However, after Riversdale caught the attention of Rio Tinto, the world’s largest miner, ICVL could not muster up the courage to take on Rio’s $3.5-billion offer and backed out without even bidding.
It has been reported private steelmakers such as Tata Steel and JSW Steel might be interested in acquiring stakes in ICVL, though both have denied this. When asked about the prospects now, a senior official from one of the companies said too many partners is what ails ICVL.
To secure 500 million tonnes of coal assets by 2020, ICVL had, in March, stated “very soon”, it would announce a deal worth Rs 1,500 crore. However, news on the deal is still awaited.
Now, with the exit of NTPC and Coal India, the government is looking to bring ICVL under the steel ministry. That way, maybe ICVL would be more focused and scout for coking coal mines that can be used by the two steelmakers. Also, decisions might be taken on time.