[miningmx.com] — COAL India Ltd (CIL), the world’s largest coal producer, may be signing an agreement with the Limpopo government later in January in terms of which CIL will obtain the mineral rights on several coal properties in the province.
Nirmal Chandra Jha, chairperson of the state-controlled CIL, said in New Delhi last week that the company’s board will consider the proposal within the next few weeks. In terms of the agreement, CIL, which is India’s fourth-largest company in terms of market value, would obtain interests in the coal mines in the province along with the Limpopo government.
A senior official in the Limpopo government told Sake24 the provincial government is acting more as a “broker’ in this transaction, which is worth several hundred millions of rands.
CIL is not obtaining mines that are already in operation, but is getting promising coal blocks where mines can be developed.
Cassel Mathale, Premier of Limpopo and a confidant and friend of suspended ANC Youth League leader Julius Malema, last year apparently invited CIL to play a part in the development of the province’s coal industry.
This was shortly after the Mozambique government granted mineral rights to coal blocks in that country. “CIL obtained the blocks entirely free of charge after the Mozambique government asked it to develop mines there. With us, they paid several hundred millions of rands for them,’ Sake24’s source said.
The mines will be developed in partnership with the Limpopo government. The province’s government will retain a 26% interest in the assets through a State-controlled corporation, presumably so as to pass ownership on to black-empowerment partners, so that CIL will comply with the conditions of the mining charter.
“The Limpopo government has already handed CIL a draft agreement, the result of months of negotiation. This will be discussed at the CIL board meeting to be held in the next two weeks.
“If the CIL board accepts it, a CIL delegation will visit the country in the week of 21 January, during which the agreement will be signed and formally announced,’ Sake24’s source said.
CIL produces more than 80% of India’s coal and operates about 500 coal mines in that country. It has pushed its coal production up from 300m tonnes in the 2003-2004 financial year to more than 400m tons in 2008, but is under serious 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.
At the end of December, the coal stockpiles of the country’s power stations were 30% lower than at the end of 2010. CIL has not started developing the coal blocks in Mozambique yet. The guidelines authorising CIL to buy interests in foreign coal mines was only approved by the Indian government in December.
– Sake24
UPDATE: The Limpopo government’s Maylene Broderick, Head of Department: Economic Development, Environment and Tourism, on Monday confirmed the discussions between the province and Coal India. Miningmx will publish more details as soon as we receive responses to our questions. – Andre Janse van Vuuren
