No response from Mozambique to Coal India’s plea for new block

KOLKATA (miningweekly.com) – After relinquishing its exploration blocks in Mozambique in September last year, Coal India Limited (CIL) has submitted a new proposal, but has not had any feedback from the African nation.

“A request had been made to the government of Mozambique for allocation of a new coal block for exploration rights and subsequent development, but there has not been any response till date,” India’s Coal Ministry says in a report.

Although the report does not elaborate, sources in the Coal Ministry say it is possible that the issue will be taken up at government-to-government level. The Coal Ministry may involve its counterparts in the External Affairs Ministry using diplomatic channels to back up the domestic miner’s efforts for a toehold in Mozambique.

In 2009, CIL was granted a six-year exploratory licence for the A1 and A2 blocks, in Tete, and after spending an estimated $80-million on exploration, the Indian miner claimed that there was no coal in the blocks, and hence no commercially viable mining operations could be pursued. This was followed up by formal surrender of the blocks, which was accepted by the Mozambique government.

In September last year, CIL submitted a proposal seeking allotment of a new coal block with possible reserves for high-grade thermal or coking coal. It has been argued that Coal India Africana Limitada, the wholly owned African subsidiary of CIL, had gained significant experience operating in the African mining environment and considering the geographical and logistical advantages offered by a coal asset in Mozambique, a new, suitable coal block would be important to the Indian miner’s global ambition.

In the fresh proposal, CIL committed investments in addition to those required for development of a new coal block. The Indian miner is reported to have submitted that its new investment plans will include construction of allied infrastructure like a rail link, in collaboration of government-owned Indian Railways to evacuate coal and a dedicated port in consortium with an Indian private port operator.