November 18, 2011 1:55:12 am
State-run mining giant NMDC Ltd has dropped a proposal to acquire the Erchim Tkhan popularly known as Vinci Coal project in Russia. Reason: one of the owners of Vinci Coal is based in North Korea,a country under heavy US sanctions.
The Rs 11,369-crore Maharatna company had last year opened talks with the owners of Vinci to acquire 100 per cent stake in the project. On October 10 this year,NMDC signed a non-disclosure agreement with one of its three owners,the Russian EN+ Coal Ltd.
The other two owners are CJSC Baltiyskaya Companiya,also of Russia,which has a 29.9 per cent stake,and the North Korean firm Vneshugol,which holds a 20 per cent stake.
The project is in Russias eastern Sakha region,and has estimated reserves of 100 million tonnes,of which 2.5 million tonnes are mineable annually. However,it currently produces barely 0.1 million tonnes to comply with licence obligations,and is in need of capital infusion. NMDC had intended to spend $165 million spread over three years.
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The companys October 10 board meeting,however,took note of the ownership of the North Korean firm,and decided to abort the proposal.
Apprehensive of an adverse regulatory fallout in case we acquired Vinci as North Korea is facing US sanctions,we have decided to drop the acquisition proposal, NMDC CMD Rana Som told The Indian Express.
The board also reasoned that Vinci was,after all,not so ideally located in terms of evacuation infrastructure,with the nearest port,Vanino,on the Strait of Tartary in the Sea of Japan,being as much as 230 km away.
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