Through the technical collaboration, the company will be able to leverage on the expertise of the foreign company in under ground mining operations.
It is planning to do contract mining of coal blocks for big players in steel, energy and other sectors where coal is the primary raw material, like NTPC and APGENCO. In fact, the company has made a simple beginning by bidding for two projects and would soon be bidding for three more projects including an under ground mining project and an open cast mining project in Jharkhand. Indu is likely to invest about Rs 2,000 crore to Rs 2,500 crore in a phased manner over the next three years for its entry into this business segment.
Speaking to FE, B Ravi Krishna, head-allied business, mergers and acquisitions said, we want to do contract mining projects as it is a very good model and will supplement the existing business of the group. At Indu, we will do both open cast and under ground coal mining projects. It will be an end-to end service, say right from developing a coal mine to delivering to the company a fixed load at a fixed cost for a period of 20-25 years. The company has the entire team in place to foray into the segment. The company is also in talks with an MNC which has the expertise in under ground mining.
The memorandum of understanding (MoU) is likely to be signed in a month. The tie up would give us the edge to bid for bigger mining contracts. Apart from bringing in technical expertise, the foreign partner would also be picking up minority stake at the SPV level, he said. The contract mining business should account for significant share to the overall turnover of the company over the next couple of years. Typically, coal mining contracts are long term contracts with tenure of say 20-25 years. It takes nearly two years for the actual production to start and the peak level production will commence in the third year, he said.