Coal India embarks on overseas acquisition of critical mineral assets

Kolkata: In a bold move to diversify its operations and integrate further into the value chain, Coal India Limited (CIL) is targeting the acquisition of lithium, cobalt, and nickel assets abroad.

The company has recently amended its Memorandum of Association (MoA) to include non-ferrous and critical minerals, indicating its commitment to expand its presence in new sectors.

In the past, the miner's attempt to acquire coal assets aboard did not fructify.

In its pursuit of overseas assets, CIL is currently identifying suitable opportunities for mergers and acquisitions, the management informed its shareholders in its latest annual report.

The strategic move reflects the company's vision to secure a steady supply of these critical minerals toward the Atmanirbhar mission of India.

In 2022, the Ministry of Mines also created a joint venture company, Khanij Bidesh India Ltd (KABIL), with participating interest from NALCO, Hindustan Copper Ltd and Mineral Exploration Corporation Ltd (MECL).

KABIL is mandated to identify and acquire overseas mineral assets of critical and strategic nature such as lithium, cobalt, etc.

In the past, NMDC and Coal India were considered for participation in the special purpose vehicle (SPV).

Highlighting capex plans, Coal India stated that it has proposed a capital expenditure of Rs 16,600 crore in 2023-24.

"As part of our investment plan, we have strategically allocated a substantial amount towards diversification projects including ventures such as solar power, thermal power plants, revival of fertilizer plants, surface coal gasification, coal bed methane and others.

"With a focus on acquisitions and JVs, we seek to venture beyond our core competencies, tap into emerging opportunities and manage associated risks effectively," Coal India informed its shareholders.

In 2022-23, the capital expenditure of CIL registered a phenomenal growth of 20.90 per cent to Rs 18,619 crore.

Coal India chairman P M Prasad said CIL has executed three Memorandum of Understanding (MoU) with BHEL, GAIL India Limited, and IOCL for undertaking coal-to-chemical business using surface coal gasification, which is proposed to be implemented jointly through JV companies.

Coal India has also signed two MoU for its foray into the thermal power business.

The first is for a joint venture between South Eastern Coalfields Limited (SECL) and Madhya Pradesh Power Generating Company Limited (MPPGCL) to implement a 1x660 MW Supercritical thermal power station replacing the retired generating units situated at the existing premises of MPPGCL's Amarkantak Thermal Power Station, Chachai, district Anuppur, Madhya Pradesh.

The other initiative is setting up of 2x800 MW Supercritical thermal power plant in Odisha, through Mahanadi Basin Power Limited (MBPL), a wholly-owned subsidiary of Mahanadi Coalfields Limited (MCL).

MoU between CIL and Assam Power Distribution Company Limited (APDCL) was executed for the purchase of 1,200 MW from the proposed MBPL Power Plant.

CIL has also established joint ventures (JVs) with prominent entities such as the National Thermal Power Corporation (NTPC), Indian Oil Corporation Limited (IOCL), Gas Authority of India Limited (GAIL), and Rashtriya Chemicals and Fertilisers Limited (RCF).

These partnerships aim to mitigate technological and financial risks associated with diversification projects, while also leveraging the expertise of its business partners, the dry-fuel miner said.