Coal India Ltd – World’s Largest Coal Producer to Diversify, Major Acquisition on the Way

Coal India Ltd. (CIL) world’s largest coal producers, is on the lookout for shareholders’ approval to modify its memorandum of association (MoA) in order to get into the business producing fertilizers and chemicals using coal gas.

Two proposed joint ventures with Gail Ltd and Rashtriya Chemicals and Fertilizers Ltd (RCF) are aimed at resuscitating the Talcher unit of another state-run firm, Fertilizer Corp. of India, which ceased operations back in 1999.

Two proposed joint ventures with Gail Ltd and Rashtriya Chemicals and Fertilizers Ltd (RCF) are aimed at resuscitating the Talcher unit of another state-run firm, Fertilizer Corp. of India, which ceased operations back in 1999.

In a filing to Bombay Stock Exchange (BSE), the company said that the amendment will allow CIL to “To produce, process, store, distribute, sell, import, export or otherwise deal in gas and other by-products arising from the coal gasification process in India and abroad and use products or by-products of gasification process of to produce ammonium nitrate, fertilizers and associated products, and for this purpose, to install, operate and manage all necessary plants, mines, establishments and works, in India and abroad”.

In 2009, the Ministry of Chemicals and Fertilizers settled on to making Gail Ltd, Rashtriya Chemicals and Fertilizers Ltd and CIL to form a consortium by signing an agreement for setting up a surface coal gasification plant for chemicals and fertilizers at Talcher. In August 2013, the government proposed two joint ventures for operating the proposed project.

JV to Facilitate Fertilizers and Chemicals Business

The amendment will facilitate CIL to set up and operate coal-gasification plants in India as well as locations abroad.

The proposal has been recently approved by CIL board. A postal ballot will take place to seek shareholders’ nod on the issue.

Two joint ventures – one for coal gasification and gas purification with GAIL and the other for setting up a downstream fertilizer-cum-ammonium nitrate unit.

The company said that Rashtriya Chemicals & Fertilizers had signed a memorandum of understand with GAIL (India) to work in co-operation and explore the potential use of byproducts from surface coal gas project in the fertilizer industry. GAIL approached CIL with a proposal to work together in the project development part for surface coal-gasification in coal-bearing states in India.

A possibility of a new urea-ammonium nitrate project is much likely at the non-operational fertilizer plant of FCI at Talcher.

CIL to Diversify Overseas

Coal India Ltd is also seeking consultant’s assistance to help evaluate overseas coal assets. The company has set its eyes on to either develop a new mine, or buy equity in an operational venture, to bring coking coal—used to make steel—and thermal coal for power plants back to the country. CIL has cash reserves of around $10.5 billion (620 billion rupees).

The world’s largest coal miner bough coal blocks in Mozambique in 2009. Its recent attempts at partnerships fell through including those in Indonesia, Australia, the U.S. including Peabody Energy. Currently, Australia and Indonesia are two feasible regions where the company might make some major acquisitions. However, the company will have to first get a nod from the government which is its biggest shareholder.

The newly elected Prime Minister Narendra Modi is reportedly considering breaking up Coal India and open up the coal sector to foreign players.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

Recent Posts

AT&T, Airbnb & UPS among firms to face Akamai’s global outage

AT&T, Airbnb & UPS among firms to face Akamai’s global outage

Global outage causes Akamai Technologies to re-think cyber securities.
2 days ago
GameStop undergoing complete makeover under new chief

GameStop undergoing complete makeover under new chief

GameStop is undergoing a complete revival under new CEO.
2 days ago
Hotel Industry in Japan Grappling with a Wave of Room Cancellations amidst ‘No-Fun’ Olympics

Hotel Industry in Japan Grappling with a Wave of Room Cancellations amidst ‘No-Fun’ Olympics

Hotel room cancellations face a one million challenge after Olympics face troubles in deciding 2020 sessions.
3 days ago
Tokyo Games organizing Committee head says cancellation of Olympics 2020 quite possible

Tokyo Games organizing Committee head says cancellation of Olympics 2020 quite possible

Tokyo Olympic Games 2021 face cancellation threat due to the rising number of Covid-19 cases, says organizing committee head.
3 days ago
Jeff Bezos announces $200 million charity award post space flight

Jeff Bezos announces $200 million charity award post space flight

Jeff Bezos announces $200 million charity award after his maiden flight to space.
4 days ago
Nvidia shares rise over performance, beat competitors

Nvidia shares rise over performance, beat competitors

Nvidia has proven working post-pandemic challenges turn into gleaming opportunities while increasing company’s shares up to 4%. The brilliance of working, brought Nvidia to chase
4 days ago