The government on Thursday gave the go-ahead to a Special Purpose Vehicle (SPV) formed by leading steel and mineral PSUs in the country to acquire stakes in overseas coal mines to meet their growing production needs.
"The Union Cabinet today gave its approval to the SPV formed by the steel companies to acquire coal properties abroad," Finance Minister P Chidambaram told reporters in New Delhi after the Cabinet meeting, which was chaired by Prime Minister Manmohan Singh.
The proposed SPV will have an authorised capital base of Rs 10,000 crore and a paid up capital of Rs 3,500 crore, he said.
Steel Authority of India Ltd (SAIL), Rashtriya Ispat Nigam Ltd (RINL), Coal India Ltd (CIL), National Mineral Development Corp (NMDC) and NTPC have joined hands to acquire coal properties abroad, especially in Australia and Canada, in view of their growing production needs.
SAIL and CIL have decided to pump in Rs 1,000 crore each for the proposed SPV, while NTPC, RINL and NMDC will invest Rs 500 crore each.
The SPV will have the freedom accorded to a Navratna company and would be able to take decision on its own on matters entailing an investment of Rs 1,500 crore. Any investment over it would have to be referred to the Committee of Secretaries and thereafter the Cabinet's approval would be sought.
A senior Steel Ministry official told PTI that initially the SPV would function as an unincorporated company and after shortlisting coal properties abroad, they would jointly launch a formal company.