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Coal India to give up 75% exploration area in Mozambique blocks

New Delhi — State-owned Coal India Limited has decided to give up around 75% of the exploration licenses in two coal blocks it had acquired in its maiden overseas venture in Mozambique, a CIL official said Friday.

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Of the total area of 224 sq km, CIL will retain around 54 sq km, the official said.

After extensive drilling, it was found that only 54 sq km has potential for coal so the company decided to relinquish the rest of the area, he added.

Currently, coal samples from the two blocks at Moatize in Tete Province are being analyzed in Indian laboratories to ascertain their quality.

Based on the analysis report, CIL will decide whether mining would be economically viable, the official said.

The Mozambique government has extended the license for the two blocks for another five years till 2019, the CIL official said.

By early next year, CIL would be able decide whether it would go ahead with the mining plan or scrap it, he added.

In 2009, Mozambique allocated two blocks at the Moatize coal field with total reserves of about 1 billion mt (of which 80% is thermal and 20% coking coal) to CIL subsidiary Coal India Africana Limitada.

This is the first acquisition by CIL abroad following bilateral cooperation agreements by the governments of India and Mozambique.

The company expected to mine about 5 million mt/year of coal from the two blocks.

CIL has been falling short of output targets and failing to meet the growing coal demand in India.

This led it to look at acquiring coal assets overseas. CIL was considering acquiring coal assets in Indonesia, South Africa and Australia as well, the official said.

--Sapna Dogra,
--Edited by E Shailaja Nair,