Coal India rejects Rio Tinto's proposal to develop underground mines

27 January 2009

Navratna PSU India Ltd (CIL) has rejected global mining giant Rio Tinto's proposal for developing its abandoned and underground mines, citing lack of required expertise to take up the project.

''They (Rio Tinto) are a great company, but have not developed any abandoned mines. Their experience in underground mining and DPR also falls short of what our 'notice inviting tender' stipulates," Coal India chairman Partha S Bhattacharyya said.

Rio Tinto India had evinced interest in partnering with CIL for developing 18 abandoned mines, which have an estimated coal reserve of 1,647 million tonnes, besides taking up turn-key contract for the underground mines.

CIL, the country's largest coal producer, plans to produce about 100 million tonnes of coal from its underground operations by 2016-17. The company is offering seven underground mines with reserves of about 20 million tonnes of coal for revival.

CIL, however, plans to invest Rs4,000 crore in the mines although these are to be awarded on a turn-key basis, Bhattacharyya said.

CIL has shortlisted nine companies out of the total 17 that have responded to its EoI and is likely to float a tender for awarding the project next month.