Coal India Set To Explore Coal in South Africa.

Inadequate supply of coal to power stations in India could well be a thing of the past with Coal India setting up a joint venture with the Limpopo government in South Africa to acquire coal mines in the province. Coal India accounts for more than 80% of the domestic coal production in India and recently revised its production target downwards.

In a bid to augment the pent up demand in India, Coal India said it had zeroed in on three unlisted overseas coal assets. The company has also decided to take up the offer of the chief minister of Limpopo government who had approached the Indian firm in June last year, seeking a joint venture.

"Some time at the end of January, Coal India should be able to sign on the dotted line and will receive mining rights on various coal blocks in the province. The Indian company will hold a majority stake while the public enterprise of Limpopo will hold at least 26%,'' said an official of Coal India adding that Coal India had received the draft memorandum of agreement with regards to the proposal.

The plan is for Coal India to acquire promising coal blocks where mines are to be developed, rather than operational mines the official said.

Coal India is the world's largest coal producer and had invited several overseas investment proposals. The official said South Africa's Limpopo province is best known for its platinum and its coal potential is yet to be unlocked. Mineral  reserves also include diamonds, chrome, iron ore and copper.

Coal India is keen to secure comparatively cheaper resources through joint ventures and bilateral arrangements, though the company received the India finance ministry's nod in November 2011 to acquire firms abroad. Though India was the primary destination for coal exports from South Africa, Indian purchases slumped with China doubling its coal imports.

Meanwhile, the board of directors of Coal India approved switching over of non-coking coal pricing from useful heat value (UHV) based grading system to gross caloric value (GCV) based classification with effect from January 1, 2012.

The Indian firm is under pressure to deliver coal to the over 20 new coal fired power stations being built in India. At the end of December 2011, coal stocks at the country's power stations were 30% lower than at the end of 2010.

Source : mineweb.com