It has been reported from New Delhi that India’s International Coal Ventures Private Limited (ICVL) was set to buy 65% of the Benga coal operation in the Tete province of Mozambique as well as two other coal projects – Tete East and Zambeze – from the Rio Tinto group for some $108-million. The report, in the Wall Street Journal, on Thursday, cited an Indian  government official, who spoked on condition of anonymity. The Anglo Australian group had refused to comment on the report.

A mission from ICVL is known to have recently visited Mozambique. Rio Tinto acquired Benga for $4.1-billion, but has since had to write-down $3.47-billion of that investment, and has been seeking to raise cash by selling assets regarded as non-core or as poor performers.

ICVL is a “special purpose vehicle” created at the initiative of the Indian Ministry of Steel, with the purpose of obtaining metallurgical and thermal coal assets in foreign countries, in order to assure the supply of imported coal. It is a partnership between the Steel Authority of India Limited (SAIL), Coal of India Limited, Rashtriya Ispat Nigam Limited (RINL – a steel company), the National Mineral Development Corporation and NTPC (India’s largest power producer).

All these companies are wholly or predominantly State-owned. Currently, SAIL has to import 75% of its metallurgical coal requirements, while the figure for RINL is 100%. In total, India currently imports about 40-million tons of metallurgical coal a year.

Should the deal progress, it would be the first acquisition by ICVL. It would thus be the first step in the fulfillment of the company’s desire to acquire a total of some 500-million tons of metallurgical coal reserves by 2019/2020.

Benga’s output of both metallurgical coal and thermal coal came to 733 000 t during the first half of this year. Perhaps ironically, ICVL originally made a bid to acquire Benga from Australian junior Riversdale Mining, but lost out to Rio Tinto.