Coal India Relinquishing Most of Its Area in Tete

The state-owned Indian mining company Coal India has announced that it is relinquishing 75 per cent of its licence area in Moatize district, in the western Mozambican province of Tete, reports Tuesday’s issue of the “Economic Times” of India.

Coal India was granted the A1 and A2 blocks in a previously unexplored part of Moatize about six years ago.

“At a board meeting last week, it was decided that the foreign subsidiary of Coal India, Coal India Africana Ltd, will just about keep 54 sq km of the 205 sq km blocks that it had earlier acquired,” a senior coal sector official told the paper on condition of anonymity “The decision was taken following completion of a near three-year exploration programme.”

At the time Coal India acquired the two blocks, it was assumed that they contained a mix of high quality coking coal and lower grade thermal coal. There were hopes of reserves of perhaps as much as a billion tonnes.

“We were told that 20 per cent of the deposits in these blocks are expected to be of superior variety, good enough to be used in steel making, while the remaining was expected to be thermal coal that could be used as fuel in power plants. It seemed a viable option at that time,” said the same official.

But the exploration went badly. The official claimed that in 75 per cent of the area, Coal India found nothing that could even be called coal.

“The quality of the reserve at a large area of the two blocks does contain carbon but it is not good enough to be called coal,” a senior Coal India executive said. “This reserve cannot sustain a 12 per cent rate of return on investment in the medium to long run.

Simply put, it is not coal.”

This announcement seems strange since, as late as November 2014, Coal India had announced that it planned to start mining on these blocks in the near future.

If the anonymous Coal India executive is right, then the company has been extremely unlucky, since Moatize district sits on vast coal seams, which other companies, notably Vale of Brazil, are exploiting.

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Source: Agencia de Informacao de Mocambique

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