Coal news and updates

CIL gets 5-yr mining extension from Mozambique

November 14: Refuting murmurs within a section of the industry, the Mozambique government has given a 5-year extension to Coal India Limited (CIL) for developing two coal blocks in the country’s Tete province.

“The Mozambique government recently increased the license period to CIL by another five years,” CIL’s Director (Technical) N Kumar told ICMW.

CIL had won a five-year licence for exploration and development of mines in Mozambique in August 2009. Two coal blocks – A1 and A2 – at Moatize, in the Tete Province of Mozambique, are spread over 200 square kilometres.

Asked about the progress on the exploration activities, Kumar said drilling is still on and is likely to be completed soon.

“The third round of exploration is on and, hopefully, it will be over before the rains start in Mozambique in November-December. We hope something happens before the last two calendar months. We will take a call once the analysis and report are available,” he added.

Extension of the license comes at a time when many in the industry started saying the initial exploration indicates that reserves in the two blocks are of very poor grade and thus it may not be viable for CIL to start mining after putting in huge investments.

It was also suggested that the Mozambique government was considering plans to not renew the license because of the slow progress in exploration by CIL and also because of the non-implementation of certain promised CSR activities in the country.

Asked to comment on this, Kumar said, “These are different issues. We had practically got the block free of cost. Though it was through a bidding process, there was no major cost involved.”

“There was a commitment by the Indian government (since the allocation was through the government-to-government route), to set up a training institute in Mozambique. But this too was not Coal India’s commitment. It was basically a commitment of the government and CIL was the agency for executing the same. However, because we are still weighing our prospects – whether we will be able to develop the block or not, based on the reserves quality –some delay is being experienced (in executing the commitment),” Kumar added.