Technical Support for Coal Block Auction
Project by Services – Mineral Analytics
Project by Mineral – Coal
Project by Country – India
Project by Regions – Asia
Heading – Valuation Support for Coal Block Auction
The mass de-allocation of coal blocks by the Supreme Court of India and subsequent auctioning of
those coal blocks opened immense opportunity for the coal consuming companies in India to own
coal mines for their plants. To grab that opportunity India’s one of the leading sponge iron producers decided to take part in the auction process. However, bidding in completely new process and competing with industry leaders was not an easy task. So they took our world class valuation service to ascertain the optimum bid price.
We carried out financial modelling and valuation for establishing an indicative bid price range for the blocks which aligned with the company’s investment strategy. With the availability of information
from the client, we projected the requirement of capital expenditure, operating expenditure and
resulting cash flows after assuming the benefits to be derived from owing a coal block for the life of mine or mining lease period whichever is lower. Then we calculated the NPV and IRR for the mining
project and determined the bid price range in terms of rupees per tonne.
We also made a comparative assessment between financial benefits of owning a coal block and
sourcing coal from the existing linkages and other sources for the client. The entire exercise helped client take an informed and objective decision in the biding process.