The International Coal Ventures ltd (ICVl, a consortium of four state-owned entities) has almost finalised the acquisition of global mining major Rio Tinto's three properties in Mozambique namely the Benga Project, Zambeze Project, and Tete East Project. According to sources privy to the development, ICVl has in principle agreed to the deal during its high-level delegation visit to the African nation, and once the consortium's board approves the transaction, it will go ahead with the acquisition by firming up the agreement with the global entity.
Sources further said that ICVl is likely to submit a bid in the range of $200 and $250 million once the deal is cleared by its board. The three properties are to be shared between NMDC, Steel Authority of India ltd (SAIl), and Rashtriya Ispat Nigam ltd (RINl). The Pioneer had reported on June 19 how ICVl is on the verge of finalising the Rio Tinto properties, which is going to be its first acquisition in the five years of its existence.
While Rio Tinto holds 100 per cent stake in Zambeze and Tete East projects, it has 65 per cent share in the Benga mine project (the remaining 35 per cent is with Tata Steel). In Benga project, ICVl is to acquire Rio Tinto's stake. Among all the three mines, Benga is an active reserve having 5 million tonnes capacity which ICVl plans to take up to 15 million tonnes per annum once the acquisition is locked.
The main issue before ICVl's board will be to finalise the share or the ratio of percentage which NMDC, SAIl and RINl will hold in the Rio Tinto properties. After this is finalised, the PSUs will have to take the permission of their respective board of directors for the acquisitions. Once these formalities are worked out, the agreement with Rio Tinto will be finalised and the process of acquiring the properties will formally begin, sources added.
A high level delegation comprising of senior officials from the Steel Ministry and the chiefs of all the three PSUs had gone to Mozambique on June 23 to work out the formalities regarding the deal.Sources said that due diligence on the properties have been conducted and major issues like evacuation of coal from there and the rail, road as well as port connectivity are all in place. Though there are some rough edges as far logistics are concerned, these will be ironed out soon, they added.
Though Coal India ltd (CIl) too was part of ICVl along with National Thermal Power Corporation ltd (NTPC), sources said that the coal major had in 2012 notified its exit from the consortium. NTPC though is officially part of ICVl, has for some time not been present in the consortium board meetings, and more or less has been inactive.
In such a scenario, NMDC, SAIl and RINl were the three main entities which showed interest in the Mozambique reserves. While the stake division of the three properties among the PSUs is yet to be finalised, sources said it will purely depend on what kind of investment each one of them would be willing to bring on the table.
Apart from being a corporate deal, the acquisition also is a step on part of the Government to develop long term relations with Mozambique in the field of mineral cooperation.Sources aware of the developments, said that the presence of Steel Ministry officials in the ICVl delegation gave confidence to Mozambique Government about New Delhi's serious interest in the Rio Tinto deal.