In what could prove to be a major shot in the arm for International Coal Ventures ltd (ICVl) - the consortium of five big State-owned entities set up in 2009 to enable them to jointly acquire assets overseas - is learnt to be in advanced level talks on acquiring mining major Rio Tinto's 65 per cent stake in its Benga coal reserve situated in Mozambique. If deliberations are successful, this could be the consortium's maiden deal.
According to highly placed official sources, a board level delegation of ICVl is leaving for Mozambique on June 23 to hold consultations with Rio Tinto officials to finalise the stake sale. It is reliably learnt that the talks are at an advanced stage and the deal is likely to be inked during the next week's visit. The valuation of the deal though is yet to be finalised.
While Rio Tinto holds 65 per cent stake in Benga coking coal mine, Tata Steel holds the remaining 35 per cent stake in it. According to Tata Steel's website, the reserve known as RioTinto Benga (Mauritius) ltd (RTBMl), during 2012-13, produced 1.41 million tonnes of coal (0.67 million tonnes of coking coal and 0.74 million tonne of thermal coal).
ICVl, which has been trying fervently to search for coal assets globally since the past five years, sources said, is hoping to finally seal its maiden catch once the Mozambique deal comes through.Official sources further said that the capacity of the Benga mine is currently pegged at 5 million tonnes annually, which is capable of going up to 15 million tonnes per annum.
In Mozambique, Rio Tinto manages the Zambeze Project (where it has 100 per cent stake), Tete East Project (100 per cent stake), and the Zululand Anthracite Colliery (74 per cent), apart from the Benga Mine project where it holds 65 per cent stake.Rio Tinto has been trying to sell off its stake in Benga Mine project for quite some time now owing mainly to the fact that it has faced difficulty in transportation of coal from the reserve, mainly due to its location near the mighty Zambesi river, which makes it a tough proposition.
In April 2011, Rio Tinto had acquired Riversdale Mining for $ 4 billion and the Mozambique assets were also part of the deal, which got transferred to it.
However later, following the erosion in the value of coal properties globally, Rio Tinto in early 2013 had to write down the value of Riversdale Mining by $3.3 billion and proposed complete divestment of the assets as it was not viable. In fact owing to this development, the then Rio Tinto Chief Executive Tom Albanese had to quit.
Meanwhile for ICVl it could be a signal for better days ahead, especially in the light of the criticism is has had to face since its inception for its failure to finalise any global asset.Though on several occasions ICVl came close to acquiring coal assets, owing to various reasons ranging from volatility in global prices of the dry fuel, and conflicting interests of its constituents, nothing could be finalised.ICVl has already witnessed the exit of National Thermal Power Corporation (NTPC) and Coal India ltd (CIl) too has distanced itself from it (though till date it has not formally conveyed its detachment from the consortium). It currently is left with three constituents - state-owned mining major NMDC, Steel Authority of India ltd (SAIl) and Rashtriya Ispat Nigam ltd (RINl).
NTPC had opted out of the consortium as it was seeking thermal coal blocks, while other members were keen on coking coal assets.