International Coal Ventures Pvt Ltd (ICVL) on Wednesday wrapped up a deal to acquire global mining giant Rio Tinto’s coal assets in Mozambique for $50 million (around ₹300 crore).
The Anglo-Australian miner told the Australian Stock Exchange that it has completed the sale of Rio Tinto Coal Mozambique to ICVL “following the fulfilment of all conditions precedent and receipt of the necessary regulatory approvals”. The deal, announced on July 30, involves the transfer of the Benga coalmine and two other coal deposits in the Tete province of the East African country.
This is the first acquisition of assets by ICVL, established in 2009.
CS Verma, Chairman of ICVL, had earlier told
Verma, who’s also the Chairman and Managing Director of Steel Authority of India Ltd (SAIL), said ICVL was putting in place a holistic plan that would take care of economic metrics of the operating mine at Benga, the mine-to-port logistic issues as well as future development of two other deposits.
SAIL is the biggest stakeholder in ICVL. State-run entities Coal India, Rashtriya Ispat Nigam Ltd (RINL), NMDC and NTPC are the other stakeholders in the company.
P Madhusudan, CMD of RINL, said the strategic acquisition was valuable for long-term interests of the Indian steel makers. Tata Steel has a 35 per cent equity stake in the Benga project as well as a 40 per cent offtake agreement.
According to sources, Tata Steel’s interests would remain protected after ICVL’s acquisition.
The assets acquired by ICVL changed hands twice in the last three years.
Rio Tinto bought over exploration company Riversdale Mining, which owned these assets, in 2011 at around $4 billion.
Before deciding to divest, Rio took a total impairment loss of $3.3 billion on its books.
In 2013, Rio’s Mozambique operations managed to reduce Benga’s operating cost by $20 a tonne and could increase in yearly coal production to 1.6 million tonnes.
It also increased the hard coking coal yield by 5 per cent and slashed the overall headcount by about 25 per cent.
However, the high acquisition price, logistic hurdles and a substantial fall in coking and thermal coal prices in the international market forced the global miner to unload the loss-making business.