Two members of the consortium buying Rio Tinto’s Mozambique coal assets have pulled out of the deal. International Coal Ventures (ICVL) partners, Coal of India (CIL) and NTPC, will not continue with the deal, according to reports in the Indian press, leaving the remaining three consortium members to continue with the deal under a special purpose vehicle (SVP).
ICVL agreed to buy Rio Tinto’s Mozambique coal assets, which include a 65% stake in the Benga mine, as well as 100% stakes in the Zambeze and Tete East coal assets, last month for US$50 million. But power producer, NTPC, and coal miner, CIL, as now not willing to take part in the acquisition, according to a senior Steel Ministry official.
“Hence it has been decided that three firms – Steel Authority of India (SAIL), Rachtriya Ispat Nigam (RINL) and National Mineral Development Corp. (NMDC) – under the administrative control of [the] Steel Ministry, will form a SVP to acquire Rio Tinto’s assets,” said the official.
SAIL will take a 48% stake in the SVP, he continued, while the other two partners will take 28% stakes.
The move highlights the tension within ICVL between the consortium members that need metallurgical coal (SAIL, RINL and NMDC) and those that need thermal coal (CIL and NTPC). The latter have previously expressed a desire to leave the consortium because of this conflict of interests.
Meanwhile, the chairman of ICVL has said that it plans to triple the output of the Benga mine to 13 milion tpa over the next three years. C. S. Verma said that the venture would be able to profitably bring in coal to India using a "secret recipe".
"I will not be able to tell you what the recipe is but we will have an operational control that will provide us coal security in a cost effective way," Verma told Reuters, adding that he expected to use existing infrastructure in Mozambique but would participate in the development of infrastructure if needed.
Written by Jonathan Rowland
Read the article online at: https://www.worldcoal.com/coal/18082014/world-coal-cil-and-ntpc-back-out-of-icvl-rio-tinto-purchase-coal/