Mercator Lines, India’s second largest private shipping company, has targeted production of 30 million tonnes (mt) of coal from its Mozambique mine once its starts production. The mine has estimated recoverable reserves of one billion tonnes. But the date of actual production is still some time away and it is expected to kick off in 2010. The company is still carrying out feasibility studies to develop the infrastructure needed.
Mercator recently entered the coal mining sector by acquiring three mines in Indonesia and one in Mozambique as part of its backward integration initiative. The company was into transportation and handling of coal. So it decided to get into coal mining. With the global freight market remaining dampened, this business will de-risk the company’s earnings from the cyclicality related to shipping freight revenues.
The company plans to produce 1.5-2 million tionnes of coal this fiscal from its Indonesian mines which started production a year ago. It has started with small mines to get the experience and will, in the future, to ramp up production to 10 mt. Mercator reported income of Rs 76.9 crore from its coal mining business in 2008-09, its first year of operations.