CIL moving towards signing 10-year thermal coal pacts with Indonesia, Australia, South Africa and the US - 15 cos invited for meeting

After nearly a year-long preparation, Coal India Ltd is finally taking a definitive step towards entering into 10-year thermal coal off-take (import) agreements with producers in Indonesia, Australia, South Africa and the US.

According to sources, 15-odd companies having global presence in coal mining sector are invited to participate in a meeting in Kolkata in January-end as a precursor to invite global tenders in this regard.

The participants in the pre-bid conference are selected against 29 specific proposals – pertaining to different mining assets in the four countries – submitted by the companies in response to a CIL tender inviting expressions of interests (EoI) from global producers.

The Coal India Chairman, Mr Partha S. Bhattacharyya, had previously mentioned that the Indian major was aiming to import coal at a discounted price when compared to the existing imports through term agreements in the country.

“We are aiming to strike long-term off-take agreements at 10 per cent discount to the index price (of thermal coal),” he said previously.

When contacted on Wednesday, Mr Bhattacharyya, refused to comment on the pre-bid meeting and other details.

However, according to sources merchant banking industry, of the 29 proposals for long-term supply of coal to CIL in India, 18 belong to coal assets in Indonesia; three proposals each were received with regard to assets in South Africa and Australia and; five proposals were received for importing coal from the US.

While the names of the companies to attend the pre-bid meeting are not available, industry sources told Business Line that almost the who's and who of global coal sector including Rio Tinto, Xstrata, Anglo American, Peabody, Massey Energy, Arch Coal, Foresight Energy, Murray Energy, Sinarmas and others submitted a number of proposals in response to the tender inviting EoIs.

India's Adani group having assets in Indonesia and Australia has reportedly submitted a number of proposals.

According to sources, the Indian coal major has divided the proposals in two categories depending on the calorific value of coal to be supplied. While bulk of the proposals received were for supplies of coal below 5000 kilo-calorie per kg, CIL would consider only higher heat value (over 5500 kcal) coal for supplies from far flung places like the US, so as to offset the high freight cost.