Coal India likely to scrap Mozambique production project on poor deposits

State-run monopoly Coal India is likely to scrap its maiden overseas coal production project as the deposits in the acquired blocks are “not good enough to be called coal,” a top company executive said. The executive, who spoke to ET on condition of anonymity, said the coal in the two blocks acquired in Mozambique is unfit for consumption by even Indian power plants, which can use the lowest variety of coal.

Coal India (CIL) has already spent close to Rs 500 crore in  exploring reserves in the two blocks. “The reserves in the two blocks do contain carbon, but it is not good enough to be called coal. This reserve cannot sustain a 12% rate of return on investment in the medium to long run. Simply put, it is not coal,” the executive said.

CIL won a five-year licence for exploration and development of A1 and A2 blocks, acquired about six years ago, in Mozambique’s north-western province of Tete.

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