17 cos submit expression of interest to develop Coal India mines

List includes Reliance Natural, Essar Mineral, Rio Tinto

Pratim Ranjan Bose

Kolkata, July 1 A total of 17 companies from India and abroad have submitted expression of interest (EoI) to Coal India Ltd (CIL) for the development and operation of high capacity underground mines in seven virgin blocks in the country on long-term basis.

The blocks spread over West Bengal, Jharkhand, Orissa, Madhya Pradesh, Chhattisgarh and Maharashtra are estimated to have geological mining reserves of approximately 1,200 million tonnes.

Reliance Natural Resources Limited (RNRL) (along with a foreign partner), Essar Mineral Resources and Essel Mining are the three prominent Indian companies that have expressed interest in the projects.

Apart from a few Chinese companies, the prominent international mining and mining technology companies that submitted EoIs are: Rio Tinto of Australia, Anglo American of the UK, Asscon Infrastructure, DBT and Walter Mining.

According to sources, in the next step Coal India will seek detailed techno-economic and price bids from the short-listed parties for the development and operation of each of the seven blocks.

The coal major will finance the cost of development (including creation of supply logistics) of the proposed mines and would enter into long-term agreements with eligible parties for procurement of coal on operation cost-plus basis.

The investment required for development of the mineable reserves in the blocks and the estimated annual production from the proposed mines will be known following detailed tendering, sources say that Coal India is looking forward to 2-5 million tonnes of annual production from each mine.

Preliminary estimates, however, suggest that considering the industry investment yardstick of Rs 3,000-3,500 a tonne for development underground mines, Coal India may have to pump anything between Rs 600-1,500 crore for the development of each reserve. In other words, development of all seven reserves may cost the company approximately Rs 4,200-10,500 crore.

The actual cost may go up depending on the technology required for developing such high capacity mines.

The coal major had originally set May 26 as the deadline for receiving EoIs. The deadline was later extended to June 27 owing to inadequate response.

On offer

The blocks offered are Tilaboni (7.72 sq km) under Eastern Coalfields Ltd; Kapuria (6.4 sq km) of Bharat Coking Coal Ltd; Jagannath (4.5 sq km) of Mahanadi Coalfields Ltd; Behraband (5.19 sq km) and Khairaha (7.2 sq km) under South Eastern Coalfields Ltd and; Murpar and Borda (9.8 sq km) under Western Coalfields. Of the seven blocks, Kapuria in Jharkhand is a prime coking coal reserve.

The five coalfield companies are wholly owned subsidiaries of Coal India.