International Coal Ventures Limited (ICVL) signed an agreement last week with global mining firm Rio Tinto to buy out its stake in three coal mines in Mozambique. In an interview to Priyadarshi Siddhanta ICVL chairman CS Verma speaks about the first ever overseas acquisition by the Special Purpose Vehicle.
ICVL has spent $50 million to buy out Rio Tinto’s stake in three coal projects in Mozambique. While Benga mine is said to be functional, when do you see the other two mines commencing operations?
Development of the other two assets is part of the future plan for ramping up of production as infrastructure becomes available. For the present, all efforts will be made to ramp up production in Benga mine itself to a level of 16 million tonne per annum (MTPA) run-of-the-mine.
This acquisition provides the right fit with the objectives for which ICVL was set up. The immediate plan is to optimise production of coking coal for imports to India for use in our steel plants and reduce dependence on purchases. Our first shipment of coking coal will come in December this year to be followed by regular shipments. We intend to deploy industry experts at the mine sites.
Do the mines have adequate infrastructure to evacuate the produce?
We currently have reservation of 32 per cent on the Sena-Biera rail corridor and the nearby port which is 2 MTPA capacity. We will utilise this fully and more if there is any spare capacity available. These mines contain very large resource of coking coal in a geography which is logistically suitable for coal imports. Increasing infrastructure capacity of both rail and port will be of highest priority for the Mozambique government. All stakeholders are involved for increasing the capacity in the shortest possible time. The operating coal mine and assets are intended to become a captive source of coal supplies for the promoter companies over the next few decades.
Why did it take ICVL five years to execute an overseas acquisition since its inception? When do we see the next acquisition?
ICVL has participated in several bidding processes for acquisition of mines in Australia, Mozambique and USA. Many of these processes did not get concluded. Also ICVL was targeting to acquire a large coal asset like the present one so that it could become a long term captive source for a critical raw material for the steel industry.
We are open to exploring options for acquisition of coal assets in other geographies also from where we could source coal, cost effectively.