MetalMiner reported recently that a consortium of state owned Indian companies International Coal Ventures Pvt. Ltd (ICVL) was actively looking at acquiring Rio Tinto’s Mozambique mining assets, and that’s exactly what happened.
While ICVL had been scouting for coal assets abroad since its inception in 2009 it had failed to clinch a deal until last week. With the takeover of the Mozambique mines, the steel majors will not run short of coking coal, a crucial raw material in the making of steel. The deal was signed on July 28.
The assets acquired by ICVL include the Benga (65 percent) and the Zambeze mines (100 percent) and Tete East Greenfield coal assets.
The SAIL and RINL are both increasing their production capacity to 23 million tons per annum and 6.3 million tons per annum, respectively. Their requirement for coking coal would increase to a level of about 25 million tons by 2015.
Chairman of ICVL and SAIL C S Verma hailed the acquisition as “historic” as it involved three “well prospected” mines that contain some 2.6 billion tons of good-quality coking coal and thermal coal.
The Consortium now plans to nearly triple production from there to up to 13 million tons per year in three years.
According to a Reuters report in the First Post, Verma explained that Benga, with reserves of 236 million tons, was already operational with Tata Steel having a 35 percent share of production. The two greenfield projects, Zambeze and Tete, had proven reserves of 1.9 billion tons and 260 million tons, respectively.
The $50-million payment will be followed by an investment of around $1 billion to ramp up production over four years. ICVL plans to raise capacity of the Benga mine from the existing 5 million tons to 12 million tons in the first phase, the report said.
In the second phase, the capacity will be pushed up to 16 million tons, making it one of the largest coal mine projects in the world.
Incidentally, others like Coal India, Essar, JSW Steel and Jindal Steel and Power already own coal assets on the African continent.