Limpopo lifts the veil on Coal India talks

[miningmx.com] — THE Limpopo provincial government has lifted the veil on its proposed partnership with Coal India, the largest coal producer in the world, saying the joint venture would seek to acquire greenfield assets or early stage projects.

This came after India’s press reported last week that the province had approached Coal India to form a joint venture for the acquisition of coal mines.

“There is a memorandum of understanding (MoU) between Coal India, Trade and Investment Limpopo and Corridor Mining Resources (a subsidiary of the Limpopo Economic Development Enterprise),’ said Maylene Broderick, Limpopo’s Head of Department: Economic Development, Environment and Tourism, in an e-mailed response to questions on Tuesday.

“The key areas of the MoU are as follow:

– “That the parties shall jointly collaborate in identifying greenfield coal assets or projects suitable for further exploration and development;

– “That the parties will collaborate on the performance of due diligence on greenfield projects identified;

– “That the parties will exchange scientific information and share technologies in mining.’

Asked whether the partners have earmarked properties, and whether mineral rights had already been issued to the province or a third party, Broderick said negotiations were still at an early stage and that particular assets have not yet been agreed upon.

Miningmx reported on Sunday the Limpopo government was to take a 26% interest in the JV, but Broderick said a shareholders’ agreement had not been finalised.
“The details of the joint venture structure are still being negotiated (and is) subject to approval by both governments,’ she said.

On the rationale for the proposed deal, Broderick said the province has a mandate to attract foreign direct investment.

“India has a need for coal and a results of BRICS, this was an opportunity to enhance this relationship and attract investment that will create jobs and contribute to the economy of the province.’

Asked whether this implied that Coal India would have offtake for all the mined product, Broderick said the issue was also the subject of continued negotiations.
Coal India produces more than 80% of India’s coal and operates about 500 coal mines in that country.

Coal India has pushed its coal production from 300 million tonnes (Mt) in the 2004 financial year to more than 400Mt in 2008, but is under severe pressure from the Indian government to produce even more coal for the more than 20 new coal-fired power stations being built in the country.

India’s NDTV reported last week the country’s Finance Ministry gave Coal India the approval in December to buy unlisted overseas firms.

“The Chief Minister of Limpopo Government had approached us in June asking us to form a JV with one of its public enterprises for exploring the coal assets,’ said an unnamed Coal India official.

“The proposal would come up for discussion in Coal India’s board and if the board of directors agree to it, then we will see how to go about it.’