Energy-hungry state miners narrow focus to four nations

  • 30/11/2012

  • Financial Express (New Delhi)

Having received only limited success in their global quest for natural resources, public sector metal and mining companies might turn their focus now on just a handful of mineral-rich countries where the chances of striking deals are much higher. The government has identified four countries — Brazil, South Africa, Canada and Australia — where bulk of the negotiations would now be initiated for acquiring greenfield projects. “The aim is to at least get four mines abroad every year. Many Indian PSUs have been trying for acquisitions abroad, but have not been successful so far. So, we are planning to have country-specific targets,” a senior mining ministry official said. The government has already singed memorandum of understandings (MoUs) with Canada and Australia to facilitate companies in acquiring various mining projects as and when the opportunity comes. It is now looking at having similar agreements with Brazil and South Africa. “We would go for MoUs with these (Brazil and South Africa) countries. Though, the dates and all have not been finalised yet, we are considering it and would like to have an agreement soon,” the official added. The three mining PSUs, National Aluminium Company (Nalco), Hindustan Copper (HCL) and Mineral Exploration Corporation (MECL), have been scouting mineral assets abroad. While, Nalco has been in talks to buy Indonesia's Ashan Aluninum (Inalum) for up to R8,000 crore, both HCL and MECL have also been looking out for assets abroad. However, none of them have been so far able to seal a deal for various reasons. Even steel PSUs like Rashtriya Ispat Nigam (RINL) and NMDC are trying hard to bag some mines abroad, but with no result. The government also formed the International Coal Ventures (ICVL), with participation from five large PSUs, but it has also failed in its attempts to secure mineral assets abroad. “One of the major issues with buying assets abroad is the valuation. In mining, valuation of minerals is the most difficult part and being a public sector company, there is always a possibility of questions being raised on the same. Secondly, the decision-making process is very slow, which delays the entire plan to acquire mines,” former HCL CMD Shakeel Ahmed said. The government's earlier attempt to set up a committee to clear overseas asset acquisition by the state-owned companies has also not fructified. The idea was to fast track the process by allowing PSUs to go for acquisition without Cabinet approval. However, the plan has not seen the light of the day.