Coal India to start exploration in Mozambique in six months news
04 April 2009

Coal India Ltd, the state-owned monopoly coal producer, is planning to start exploration of two mining blocks in Mozambique that has been allotted to it joint venture within six months.

CIL and Steel Authority of India Ltd (SAIL) has set up a special purpose vehicle with each holding 28 per cent stake in the SPV for taking up mining exploration in Africa and other regions.

CIL, being the producer, plays the lead role in assessing the acquisition opportunities on behalf of the consortium partners.

"The roadmap for developing the two coal blocks is being prepared. Hopefully, the exploration work should kick off in six months," Partha S Bhattacharyya, chairman of Coal India, said.

The two coal blocks -- A1 and A2 - are spread over an area of 200 square km and their exploration may take over two years.

Mozambique, he said, has asked CIL to submit an application for forging a joint venture with a local company in the African country to develop the blocks.

The African company may take a 15 per cent stake in the JV and the licence for exploration of the blocks would be issued to the joint entity.

Coal India plans to export 85 per cent of the output from the Mozambique mines to India, leaving a minimum 15 per cent for local market there.

Mozambique has one of the largest reserves of thermal as well as coking coal in the world and has recently offered block A1 and A2 to CIL as part of a concession agreement. Of the 2 blocks, A1 is most promising and has an estimated reserve of 1 billion tonne thermal and coking coal reserve. CIL is expected to invest Rs700 crore to Rs800 crore in developing the assets in next 5 years.

According to early estimates, the mines have a production capacity of 5 million tonne a year in the first phase.

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Coal India to start exploration in Mozambique in six months