Coal India Ltd has sought the Government's approval to acquire unlisted entities of listed companies overseas, according to the CIL Chairman Mr N.C. Jha. The company has written to the Coal Ministry seeking approval on the issue and is awaiting a reply.
“We are waiting for the Coal Ministry's approval. Only then we will be able to give shape to our acquisition plans,” Mr Jha told reporters after addressing the members of India Energy Forum on ‘Challenges of Coal Demand.'
Coal India has permission to acquire only listed overseas entities.
The company is in advanced talks to acquire overseas mineral deposits in the US, Australia and Indonesia.
The world's largest coal producer is reportedly eyeing the mining assets of companies such as Massey Energy and Peabody Corp. Such mining assets are registered as unlisted companies. The targeted entities have a resource reserves ranging from 50 million tonnes to 150 million tonnes.
“We hope to sign deals over the next six months,” Mr Jha had recently said. Coal India has set aside Rs 6,000 crore towards acquiring overseas mineral deposits.
On the proposed long-term off-take initiative, Mr Jha said the company was currently evaluating the bids and expects to finalise the import plans over the next three months. Coal India has received some 28 bids from foreign companies to supply a total of 360 million tonnes over the next 10 years.
Coal India was hoping to get some discounts to market price from the suppliers, who have placed their bids. However, the company's expectations have been belied as no discounts were forthcoming. On the contrary, “suppliers expect us to pay a premium to the index price for assured supplies,” Mr Jha said.
India imported about 70 million tonnes of thermal coal during 2010-11 as domestic output, constrained by environmental regulations, was insufficient to meet the rising demand. For the current fiscal, the shortfall in coal supply is estimated at 142 million tonnes.
The demand for current year is estimated at 696 million tonnes, while the domestic output is projected to be around 554 million tonnes.
Coal India and its subsidiaries have set a production target of 452 million tonnes for the current year as against 431 million tonnes produced last year.
Mr Jha said besides land acquisition, the delay in forest and environmental clearances and the inadequate infrastructure to evacuate produced coal were the major impediments in production.
Meanwhile, the Group of Ministers (GoM), set up in February to sort out the inter-ministerial issues on the environmental norms affecting coal sector projects is expected to meet again on July 2.