Coal India Africana Limitada

This article is part of the CoalSwarm coverage of Mozambique and coal
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Mozambique and coal Proposed coal plants Existing coal mines Proposed coal mines Coal transport and infrastructure Sena railway Nacala Corridor Coal terminals Beira port Nacala port Power companies and agencies Coal mining companies and agencies in Mozambique Coal India Africana Limitada Rio Tinto Coal Mozambique Vale Indian coal companies with projects in Mozambique Pacific Basin coal market
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India and coal Global use and production of coal International Information on Coal Rio Tinto's coal interests Vale's coal interests World Bank and coal

Coal India Africana Limitada (CIAL) is a subsidiary of Coal India Limited (CIL), an undertaking of the Government of India. Coal India Africana Limitada was established in 2009-10 to develop coal projects in Mozambique.

CIL's exploration titles - referred to as the A-1 and A-2 blocks in Tete province - cover an area of 22400 hectares and were granted in 2009. The exploration titles are valid for five years. The awarding of the exploration licence followed a May 2006 agreement between the governments of Mozambique and India to promote bilateral cooperation in the development of coal resources.

If a mine is commissioned, it is planned that the entire output be exported to India. One news article reported that it was expected that the projects were likely to contain 20% coking coal with the remainder thermal coal.

Coal projects

In April 2009 CIL was awarded a five-year licence for exploration and development of two coal blocks - referred to as A1 and A2 - at Moatize, in Tete Province of Mozambique. “Coal India was granted a concession on an area of 205 square kilometres and preliminary surveys suggest that there are reserves of 1 billion tonnes. We plan to start mining the block within six months but before that happens Coal India will have to establish a partnership with a company designated by the Mozambican Government, which will take a 15 percent stake in the project,” said Partha S Bhattacharyya, the chairman of Coal India.

The two blocks cover over 200 square kilometres. In a February 2011 interview Bhattacharyya told the Business Standard that in Mozambique CIL "have already got two blocks. Getting the coal evacuated is the only issue there."

Dispute over infrastructure and social spending

In June 2012 it was reported that CIL was in discussions with Essar and the Jindal Group over the joint development of railway infrastructure. "A major area of concern for our Mozambique assets is that it requires some 500-600 kilometres of railway track to be built so that the coal can be transported to the ports. However, in the same area, there are other Indian companies. The infrastructure burden can be shared between us, and it’s not that the entire costs would be entirely on our Mozambique subsidiary. We are pursuing it," a director of Coal India said.

Existing and potential railway lines to export ports

At the present time, there is limited transport infrastructure for the coal. The existing Sena railway to Beira port, has limited capacity (approximately 5-6 million tonnes a year), is subject to flooding and, in 2013, has been disrupted following violent clashes between government military forces and former civil war combatants. Beira port also requires frequent dredging..

Vale is currently developing Nacala Corridor project, a 912 kilometre long railway to connect the Moatize mine with a new coal export terminal at Nacala. The project involves upgrading 682 kilometres of existing railroad and building a new 230-kilometre section. Vale have variously reported the Nacala railway line as planned to have a capacity of 18 million tonnes a year and 20 million tonnes. Vale stated in an April 2013 investor call that the first shipment through the port was scheduled for January 2014.

In July 2013 the Mozambique government is scheduled to select a winning bidder from six preferred bidders for the construction of a new 525 kilometre rail line from Tete province to Macuse and a new 25 million tonne a year multi-cargo port. The government wants the new port to be capable of being doubled in capacity. The bid winner will be required to fund the project, estimated to cost US$3 billion. (See Moatize to Macuse railway line.)

CIL had argued that it was reluctant to invest in social programmes in the absence of infrastructure to support coal exports. "I don't know when we will see the infrastructure support to move the coal," an anonymous CIL executive told LiveMint in mid-2013. "If at all we decide to go ahead in Mozambique, there's no way we can meet the initial target to mine coal by 2015," he said. Another report cited an unnamed CIL executive stating that "we are assuming that by the time we start mining in 2016, the Mozambique government would build infrastructure for evacuation.”

Social programme funding

In 2012, the government of Mozambique complained to the Indian government that CIL had not followed through on commitments to fund a range of social programmes and over delays in commencing its exploration programme. "We are concerned with the delays by Coal India," Mozambique’s vice minister of mineral resources Abdul Razak Noormahomed said. "We are working with them so that they fulfil the commitments made by them." It was reported that CIL had proposed the establishment of the Central Mine Planning and Design Institute Ltd in Mozambique.

In mid-2013 it was reported that CIL had allocated $42-million to fund social projects, including industrial vocational training.

Exploration programme

CIL have flagged that they will undertake a three stage exploration programme. The first round of drilling, comprising four drill holes, was done in December 2012. In late 2012 CIL awarded a $80-million exploration contract to Tribeni Minerals Mozambique.

In June 2013 it was reported that CIL would drill 30,000 metres on the block over 100 to 150 boreholes. "The third round of exploration will involve drilling another 35,000 metres and we hope to complete the entire process, analyse and ascertain the reserves in about a year and a half. After this we hope to apply for all the clearances and appoint amine developer. We hope to start mining in about two years," a CIL official told the Economic Times.

Finger pointing over delays

An unnamed CIL executive sought to blame the Indian government for the length of time between the awarding of the exploration licence and the likely commissioning date. "The delay occurred largely because the Indian government’s own interest in the African region hijacked what was a completely commercial deal for us," a CIL official said.

Timeline

• May 2006: agreement between the governments of Mozambique and India to promote bilateral cooperation in the development of coal resources.
• April 2009: exploration licences over blocks A1 and A2 granted to Coal India. (Some reports refer to the licences being granted in August 2009, though an April 2009 interview with CIL indicates the company had the "concessions" at that time). The exploration licences areas are numbers 3450L & 3451L.
• June 2011: the board of Coal India Africana Limitada was formed;
• October 2012: Ernst & Young was chosen, according to LiveMint, "to finalize the capital structure of Coal India’s Mozambique unit.
• December 2012: First exploration drilling.
• Potential commissioning date: 2016-2017.

Personnel

• Satyanarayan Mishra General Manageer, CIAL & Country Head, Mozambique

Contact details

Coal India Africana Limitada,
167 AV Kenneth Kuanda Av,
PO Box-4751,

Office/Residence at Rua 3 De Fevereiro,
Tete, Mozambique

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