[Economy] Coal acquisition from Abroad: ICVL and its problem

SubscribeZ-Miscellaneous

  1. What is ICVL?
  2. Why was ICVL formed?
  3. What’s ICVL’s problem?
  4. Why no acquisition of coal mines abroad?
  5. Coal India’s problem
  6. Mock Questions

What is ICVL?

  • International Coal Ventures Limited (ICVL) —
  • It is a joint venture company
  • formed in 2009 jointly by following entities:
Administrative control
Steel Authority of India Ltd (SAIL) Ministry of Steel
Rashtriya Ispat Nigam Ltd (RINL) Ministry of Steel
National Mineral Development Corporation (NMDC) Ministry of Steel
National Thermal Power Corporation Ministry of Power
Coal India Limited (CIL) Ministry of Coal
  • It has a capital base of about Rs 10,000 crore and enjoys the powers of a navaratna company.

Why was ICVL formed?

  • To secure metallurgical coal and thermal coal mines abroad, preferably in  Australia/ New Zealand, Indonesia, Canada/ USA, South Africa/ Mozambique.
  • By the way India has sufficient coal in its own land, but it is either located in Naxal region or cannot be mined due to environmental clearances/ Supereme Court order, hence the need to acquire more coal from abroad.
Type Use
Metallurgical coal to make coke for the iron and steel industry.
Thermal coal electricity generation in thermal power plants.

What’s ICVL’s problem?

  • Ever since its formation, it has failed to acquire any overseas coal assets either through bids or through takeovers.
  • This non-performance by ICVL has spurred members to quit the ICVL.
  • So on one hand you can’t dig enough coal from India, on the other hand, you are not acquiring enough coal from abroad. What will happen?
    1. WPI will increase
    2. IIP will decrease
    3. GDP will decrease.
    4. All of above.

Why no acquisition of coal mines abroad?

  • Its members have been doing overseas acquisitions on their own.
  • Mineral giant NMDC went ahead and secured mines in Australia and
  • CIL secured two coal blocks in Mozambique.
  • These individual pursuits by the members are diluting the collective efforts made by them under ICVL.

Coal India’s problem

  • NTPC has already quit from this ICVL because of its non performance.
  • Of the remaining four members, three are under the administrative control of the steel ministry and are consumers of metallurgical coal to be sourced through ICVL.
  • Whereas Coal India (CIL) itself is a coal seller.
  • So, the business interest of CIL would be seriously compromised if it remains in this ICVL gang.
  • Therefore, Coal India is also thinking about quitting ICVL gang.

Mock Questions

Q1. Match the following

  1. Rashtriya Ispat Nigam Ltd (RINL)
  2. National Thermal Power Corporation
  3. Coal India Limited (CIL)
  1. Ministry of Mines and Mineral
  2. Ministry of Coal
  3. Ministry of Power
  4. Ministry of Steel

Q2. Write an Essay on following
“Energy security and Environmental Protection cannot be achieved simultaneously.”

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