Acceleration for Indian coal blocks as Singareni Collieries look to tie up with state owned power and mineral companies

Singareni Collieries are responsible for the bulk of coal production from the resource rich Godavri Valley and subsequent supply to a vast number of power plants in India, but they have had major struggles with strikes, environmental clearance and financing. This difficult situation could be about to change as they are now looking at tying up with state-run power and mineral companies to take up mining projects on coal-sharing basis.

“Talks with DVC are in the early stages, but we are hopeful of a positive outcome soon,” Sutirtha Bhattacharya, Chairman and Managing Director, recently said.

After signing up with NTPC and MMTC Ltd, the miner is now in talks with not only Damodar Valley Corporation but also APGenco to ink such joint venture mining deals.

Singareni has signed preliminary agreements with NTPC and MMTC for taking up mining projects in their allotted coal blocks in Chhattisgarh and Jharkhand respectively. While the joint venture with NTPC will involve taking up a 18 million tonne project in different coal blocks in Chhattisgarh, the venture with MMTC will involve tapping its allotted mine in Jharkhand (estimated to have reserves of about 287 mt).

However, both these tie-ups are based on a revenue sharing model. Singareni, which has limited scope to raise capacities as it has not been getting adequate blocks, will now be looking at joint ventures with coal-sharing models.

“Switching over to resource-sharing model will be part of our talks with Damodar Valley and APGenco,” Bhattacharya said.

DVC, which is adding 2,000 MW capacity, plans to turn its mining assets with four blocks into a separate business unit, which would enter into the joint venture with Singareni.