Ispat Industries Ltd has put its coal mining venture, Central India Coal Company (Cicco), with the $ 11 billion Rio Tinto of the UK, on the back burner.
A senior executive of Ispat Industries confirmed the move and pointed out that the board of Cicco, which was constituted with four members, stood scrapped.
Financial institutions led by the Industrial Development Bank of India (IDBI) had wanted Ispat to call off the venture as a precondition for additional assistance of Rs 350 crore for completing its steel project in Dolvi, Maharashtra.
Sources said Ispat has decided to re-invest project promotional expenses of Rs 22.26 crore into Ispat Industries' 3 million tonne hot-rolled coil unit.
While Mittals held 51 per cent stake in Cicco, Rio Tinto had the rest. The venture was supposed to provide coal to Ispat's Industries 1,000 mw power project in Bhadrawati, Maharashtra.
Institutions has also barred Ispat Industries from undertaking any advance on its funds for providing corporate guarantee to its independent power project, Central India Power Company (Cipco), Cicco and Hughes Ispat Ltd or any other projects without prior written approval of the lead institution IDBI.
Meanwhile Rio Tinto, which has set up a 100 per cent subsidiary called Rio Tinto India Ltd, has entered into a 50:50 joint venture with the Orissa Mining Development Corporation (OMDC) for mining operations in the state.
Industry sources say the joint venture has conducted a pre- feasibility study and is planning to proceed with the mining activities. The project estimated at a cost of $700-800 million is expected to have an annual production capacity of 8-10 million tonne per annum. Rio Tinto is also scouting for joint venture partnership for entering into in captive mining.
Sources familiar with Rio Ti
