CIL gets coal mine equity proposals from Rio Tinto, GVK Group

Coal India's quest for overseas expansion is expected to bear fruit soon with the state-owned miner receiving at least 60 proposals offering coal mine equity.

Coal India Ltd (CIL), already the world's single-largest mining company, is reported to have received at least 60 proposals from firms, including Tinto Plc and the GVK Group offering equity in their coal mines.

CIL, which has around Rs45,000 crore cash on its books, is looking for bargain offers. It has earmarked Rs35,000 crore for overseas asset purchase in the next five years.

But, with Indian companies that have bought stake in resource firms overseas now looking for bail outs from their huge debt pile, CIL is looking at the right asset at the right price.

''We have received more than 60 proposals in response to our call for expression of interest (EoI) for acquiring coal assets overseas,'' reports quoting a CIL executive said, adding, ''Of these, around seven proposals have cleared the initial stages and are under consideration.''

CIL also received an expression of interest from MMTC for its plan to import coal to meet supply agreements with power plants in India.

India, which is increasingly dependent on imports for its domestic coal requirements, has been trying to cut its dependence on coal and oil imports by buying stakes in overseas assets, a move that could reduce both supply risks as well as price shocks.

CIL, however, is reported to have turned down the GVK Group's proposal to buy equity in its Australian coal mine because of the risks associated with the implementation of the project and a strong Australian dollar.

While reports said Rio Tinto, the world's third largest miner, is looking at sale of coal mine stake, the company did not make any specific comments on the CIL issue.

Coal Videsh Ltd, CIL's arm for overseas acquisitions, was earlier in talks with coal firms such as Peabody Energy Corp and Rio Tinto for a strategic alliance to mine coal in Australia, the US, South Africa and Indonesia.

In the year ended 31 March, CIL reported a production shortfall of around 20 million tonnes because of muted demand for the fuel and the unwillingness of state electricity boards to buy more power at high costs.

With CIL production at around 462.5 million tonnes against the targeted 482 million tonnes for 2013-14, India will have to import coal to meet growing demand.