State-run Coal India (CIL) is likely to set up a subsidiary for buying coal assets in South Africa, as part of efforts to boost its output.
The government of Limpopo, the northernmost province of South Africa, approached CIL a couple of months back, requesting the PSU to form a joint venture (JV) with one of its public sector firms for acquiring coal mines there, a top official in CIL said.
The joint venture would be between the public firm of Limpopo and a subsidiary of CIL, he said.
“The Chief Minister of Limpopo Government had approached us in June asking us to form JV with one of its public enterprises for exploring the coal assets. In this JV, CIL will have majority share while the public enterprise of Limpopo will have at least 26 per cent stake,” he said.
The Limpopo government has also handed over its draft memorandum of agreement on the proposal to CIL.
“The proposal would come up for discussion in Coal India’s board and if the board of directors agrees to it then we will see how to go about it,” the official said.
A fortnight back the board of directors of the public sector firm had approved a proposal of the mining firm to acquire stakes in unlisted firms overseas, provided the “offers were valid“.
The development come in the wake of Finance Ministry approval last month for the public sector firm to go-ahead with a buyout of overseas firms that are unlisted.
The PSU has put together a war-chest of Rs 6,000 crore for acquisition of mines.
The world’s largest coal miner has zeroed in on three unlisted overseas coal assets for acquisition.
CIL, which accounts for more than 80 per cent of the domestic coal production, recently revised its production target to 440 million tonnes (MT) from 452 MT fixed in the beginning of the ongoing financial year.
In October, inadequate supply of coal to power stations had resulted in acute power cuts in many parts of the country, including North India.
Dispatch of coal to power firms suffered a setback in August and September due to heavy rains in all the coalfields, adversely affecting production and transportation of coal from mines to railway sidings.