- Daily Zen
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.
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.