India's state-owned miner National Mineral Development Corporation (NMDC), the third largest iron ore producer in Asia, is reportedly in talks for the purchase of four coal mines belonging to Russian Far Eastern coking coal producer Kolmar, a controlling stake in which was acquired in April this year by Intergeo, a Russian company that manages the mining assets of Onexim Group investment firm.
Accordingly, the talks for the acquisition of Kolmar's mines, which have a total of 400 million metric tons of coking coal reserves of K, GZh and Zh grades in the south of the Yakutia territory, are likely to be completed in December.
The Russian coal is to be used by NMDC to secure raw materials for its two upcoming steel mills - one $3.6 billion mill being constructed in Chhattisgarh and planned to be commissioned in 2014, and another $2 billion mill planned in Karnataka through a partnership. NMDC has been eyeing coal assets in India too and is engaged in talks with some of the state governments for allotment of mines. In addition, recently the company, which already has an agreement with KSK Energy in relation to coal mining, has also entered into a memorandum of understanding (MoU) with Tata Power to jointly exploring possibilities as regards coal assets. NMDC on its own has been working on coal assets in Madhya Pradesh, Chhattisgarh, Jharkhand, West Bengal and Orissa. It has been working on a plan to achieve two billion mt of coal assets in the next five years.
Meanwhile, some Russian analysts consider that Intergeo is unlikely to directly sell its assets in Kolmar, but may create a joint venture with NMDC, with the latter to provide the project with equipment in exchange for guaranteed coal supplies. The approximate amount of the projected investment in Kolmar was previously estimated at $250-300 million for two or three years, and in 2011 Intergeo was planning an initial public offering.
In April this year, Intergeo said that by 2012 it plans to become one of the largest coal companies in Russia, with total reserves of more than 700 million mt, and with a volume of concentrate production of more than 8 million mt per year.