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ICVL halts ops in Mozambique mine; to pump in more investments
International Coal Ventures Limited (ICVL), the joint venture formed by five PSUs SAIL, RINL, NMDC, NTPC and CIL, has stopped
​Hyderabad: International Coal Ventures Limited (ICVL), the joint venture formed by five PSUs SAIL, RINL, NMDC, NTPC and CIL, has stopped operations in its newly acquired coal mine in Mozambique and they remain suspended until a new contractor is appointed. The Board of Directors of ICVL had approved to stand guarantee for USD 150 million as capex loan to the beleaguered mine. According to a senior official of one of the partner PSUs in ICVL, coal mining has become expensive as compared to the prevailing rates and the joint venture is in the lookout for cheaper rates. "ICVL has suspended its operations (in Mozambique mine) since December last year as the term of the previous contractor was over.
ICVL has issued notification seeking expression of interest from contractors. The whole process is expected to take a few months. Till then there will not be any mining from Mozambique Mine," the official told PTI. ICVL was formed for acquisition of stake in coal mines or blocks or companies overseas for securing coking and thermal coal supplies. In view of lack of suitable commercially viable opportunities for thermal coal, NTPC has decided to exit from ICVL. Coal India also later informed that it is not interested in continuing in the joint venture. As ICVL was formed by a directive from the government of India, approval is awaited for exit by NTPC and CIL.
In 2014, ICVL signed a pact to buy Rio Tinto's 65 per cent stake in Benga and 100 per cent each in Zambeze and Tete East coal assets in the African nation for USD 50 million. Benga, the only operational mine, was making cash losses.
SAIL with 46.63 per cent stake in ICVL had invested Rs 495.03 crore in equity shares provided a letter of comfort of USD 30 million to Exim Bank.
"ICVL post acquisition of Benga mine at Mozambique had tried various options of cost reduction and minimise the cash loss in operation. The company had achieved significant reduction in cost compared to the pre acquisition era." SAIL said in its latest annual report.
"However, with the depressed coking coal prices, the operations continued to make losses. The mining operations had stopped from 31st December 2015. ICVL is undertaking a strategic review for future course of action," it added. ICVL has so far infused Rs 1,214.60 crore for the Mozambique mining operations and another USD 30 million loan by the Exim Bank has also been pumped into the operations.
"In addition, the Board has also approved for providing a corporate guarantee to Exim Bank to secure USD 150 million (equivalent to Rs 1006 crore) Long Term Capex loan in favour of Minas De Benga (MBL)," ICVL had recently said. "The Board has also approved a cash call of USD 69.30 million( equivalent of Rs 465 crore) to meet the working capital requirement of Mozambique operations to be invested through ICVL Mauritius, a wholly owned subsidiary of company in Mauritius," it added.
