India’s Coal Ministry has directed International Coal Ventures Limited (ICVL) not to waste time in operationalising existing overseas coal blocks or delay the acquisition of new assets.
It also warned ICVL that delays in achieving these objective were “unacceptable”.
ICVL, a special purpose vehicle of government companies, was established in 2009 with the mandate to acquire coking and thermal coal assets overseas; however, it has made limited progress in reaching its goal of securing at least 500-million tonnes of coal reserves overseas by 2020.
ICVL is a joint venture between government companies, including steel producers Steel Authority of India Limited, Rashtriya Ispat Nigam Limited, iron-ore miner NMDC Limited and coal miner Coal India Limited.
The Coal Ministry, through its stricture, has directed that ICVL “waste no further time” in resuming production at its existing Benga coal block in Mozambique, in which it acquired a 65% interest in 2014, from Rio Tinto. It had also acquired the Tete East coal block.
In 2015, ICVL halted production at Benga, saying the crash in international coking coal prices had made operations financially unviable.
The Coal Ministry observes that, with international coking coal prices having rebounded from a low of $80/t when the Benga operations were halted, to levels of above $200/t at present, ICVL needs to resume production overseas “immediately”.
It pointed out that the operations of specialised mining companies like ICVL need to be aligned with the new National Steel Policy, a draft of which is now in circulation.
The policy states that Indian steel production is targeted to increase to 300-million tonnes a year. To achieve cost competitiveness, domestic steel producers are be expected to cut their reliance on imported coking coal.
“The Indian steel sector is disadvantaged due to the limited availability of essential raw materials and, due to a shortage of domestic coking coal, both in terms of quality and quantity, pig iron producers and blast furnace operations in India have to significantly depend on importing coking coal,” the draft policy said.
As a result, it is imperative for companies like ICVL to fit into the overall objectives of the policy through significant gains in securing critical raw materials sources overseas, a Ministry official added.