05 September 2012

India's Jindal Steel and Power acquires CIC Energy, Access to thermal coal resources in Botswana

New Delhi - 05 September 2012 - Jindal BVI Limited (JBVI), a subsidiary of steel major Jindal Steel and Power Limited (JSPL) has acquired Canadian listed coal Company CIC Energy Corp. (CIC) for about US$115 million (over Rs 600 crore) by way of a merger of JBVI and CIC. 

The Minister of Minerals, Energy and Water Resources of Botswana where CIC has its coal mines, has already approved the change of control from CIC to JBVI and all other approvals for the merger have already been granted and the merger certificate will be issued in the next few days marking the completion of the acquisition. 

The deal will provide JSPL access to CIC’s high quality thermal coal in Greater Mmamabula coalfield in SE Botswana which is estimated to be in excess of 6 billion tonnes (approx) (including Measured and Indicated resource of 2.4bn Tonnes). 

The deal will provide JSPL the opportunity to tap the highly lucrative and power deficient South African Development Community (SADC) countries and given the huge resource, will also provide an opportunity to set up a Coal to Hydrocarbons project. 

Speaking on the occasions, JSPL’s Director and Group CFO, Mr. Sushil Maroo said, “This is another step in the direction of backward integration as the coal assets will give the company self-sufficiency when it comes to dependency on natural resources. This will enable JSPL in becoming a more self-reliant and fuel secure enterprise.” 

Pursuant to the merger of JBVI and CIC, JBVI, being the surviving company, will make cash payment of C$ 2 per share to the current CIC shareholders aggregating to C$ 116 Mn approx. JBVI has already transferred the consideration amount to the depository for onward payment to CIC shareholders. 

CIC has already been granted water allocation for the mining and power plants and has also received the environmental approvals for its power projects. CIC has done extensive drilling in its coalfields and has drilled approx. 2100 boreholes totaling about 186000 meters. CIC has already incurred development expenditure of C$ 246 Mn on the projects including the manpower costs and overheads. 

The ROM coal quality has ash ranging from 23% to 42% and the Gross Calorific value ranges from 3700 to 5500. The total area of the mines is 315 sq km approx. 

CIC is the frontrunner for building a 1200 MW power plant in Botswana for supply of power to South Africa. 

JSPL, together with Jindal Power limited, has chalked out an ambitious target of having more than 25,000 MW electricity generation capacity by 2020 and in the long run, the deal would potentially provide the company a long-term source of coal. 

JSPL already has acquired stakes in coal mines in South Africa, Mozambique, Australia and Indonesia. 

Jindal Steel and Power Limited (JSPL) is one of India’s major steel producers with a significant presence in sectors like Steel, Mining, Power Generation and Infrastructure. With an annual turnover of over US $3.5 billion, JSPL is a part of the over US $ 17 billion diversified O. P. Jindal Group. 

Source: Jindal Steel and Power Limited (JSPL)