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Wednesday, June 9, 2010

NMDC-Monnet joint venture to acquire coal blocks

The country’s largest iron ore mining company National Mineral Development Corporation (NMDC) is forming a 51:49 joint venture with Monnet Ispat & Energy to acquire and develop coal blocks in India. NMDC will have a majority stake in the JV company, which will bid for coal mines with reserves of 200 to 300 million tonne.

A memorandum of understanding for the proposed JV was signed on Tuesday. “As part of the agreement, Monnet will provide technology and expertise for coal mining,” said Ajay Bhatt chief financial officer of Delhi-based sponge iron maker Monnet Ispat. The coal will either be sold commercially or be used internally for power projects that the JV may intend to set up in future.

Besides developing its own mines the JV will also help explore and develop mines for other companies, Mr Bhatt said. The new venture is expected to be set up in the next few months and investments in the company will depend on the size of the coal mine to be developed. According to mining experts, the development of a 100 mt mine may entail investment of Rs 200 to 250 crore on an average.

NMDC has set a target to own at least 2 billion tonne coal assets in the country over the next five years. The iron ore miner has two thermal coal blocks in Madhya Pradesh. Sandeep Jajodia-led Monnet Ispat runs a 5-lakh tonne steel plant at Raipur in Chhattisgarh. It is establishing a 1.5 mt integrated plant along with an 80-mw power generation unit at the same location.

The company will source coal for its future requirements from the proposed JV.

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