India’s Singareni Collieries Company Limited (SCCL) has announced plans to open 17 new mines – 11 opencast and six underground operations – to ramp-up coal production by 32-million tonnes a year over the next four to five years.
The country’s second-largest government-owned miner currently operates 32 underground mines and 16 opencast mines across the coal reserves at the Godavari River Valley, which has estimated reserves of 10-billion tonnes along a single stretch of 350 km.
However, the company intended to close eight underground and four opencast operations over the next four to five years, owing to dwindling reserves from these mines and consequent rising production costs.
A company official said that the opening of new domestic mines would reduce SCCL’s dependency on high-cost underground mines. SCCL’s cost of production from opencast mines was about $27/t to $30/t, compared with its underground mines’ production costs of as high as $61/t.
The SCCL corporate strategic plan has not yet firmed up the capital investments required for opening the new mines, a company official said.
The miner has also made its first move to look for overseas coal assets in Australia, South Africa and Indonesia, the official said.
Predominantly a domestic miner with little global experience, SCCL has set up a task force to interact with Coal Videsh Limited, the overseas arm of Coal India Limited (CIL), to familiarise itself with the legal anf financial procedures of acquiring coal assets overseas, given the latter’s experience in acquiring coal block in Mozambique’s Tete province.
Besides seeking help from Coal Videsh, SCCL has set up an internal committee to identify and conduct due diligence on small and medium-sized coal assets in the target countries.
SCCL’s global ambitions have been fuelled by the creation of the new Indian province of Telengana from Andhra Pradesh in southern India, where the miner’s operations are located. Following the formation of Telengana, the 51% ownership of SCCL was transferred to the Telengana government while the balance will continue to be vested with the federal government.
After securing majority ownership of SCCL, the Telengana government had prodded to miner to expand internationally as part of its medium-term plan to ramp up coal production from about 50-million tonnes a year.
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