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Kleros or Tata?

Will foreign investors invest in the extraction of Kamchatka coal

Krutogorovskoye coal deposit in Kamchatka remained without a licensee. The auction for the right to develop it was postponed to a later date due to the absence of participants - no applications were received. Earlier it was reported that the Indian company Tata Power was interested in the field, however, she did not submit any documents to "Kamchatnedra". Regional news agencies сообщили, that foreign investors may have lost interest in the project. Is this so, understood EastRussia.

Kleros or Tata?
The agreement on cooperation between the government of the Kamchatka Territory and Tata Power was signed in Mumbai in March this year. Governor of Kamchatka Vladimir Ilyukhin promised the Indian side tax preferences and assistance in the development of infrastructure. In particular, it was supposed to introduce the regime of the territory of advanced development in the territory of Sobolevsky district, where the deposit is located. The regional authorities also assured investors that they will help to coordinate the construction of port facilities with Rosmorport.
"The Indian side is interested in developing the field. But it is in a remote area, and there is a problem with the infrastructure. During the meeting, we discussed possible support mechanisms, which are now being successfully implemented in the Far East. Tata Power intends to claim the status of a priority project for obtaining state support measures for the development of infrastructure. We also discussed regional tax incentives that the company can receive, "Vladimir Ilyukhin said after signing the agreement.
Krutogorovskoye coal deposit - the largest in Kamchatka. Its total reserves are estimated at more than 260 million tons. The volume of investments in development of the field by Tata Power was to be 560 million dollars. According to Vladimir Ilyukhin, the Kamchatka authorities are interested in the project, as it will create new jobs, provide tax revenues to budgets of all levels and solve a number of transport problems.
The regional government has already begun to draw up a project roadmap. The governor said that the Indian side could begin its implementation before the end of the year. In these circumstances, the Rosnedra auction was perceived as a mere formality — only one participant was assumed, with whom all key points of the transaction were agreed. However, the Indian company did not submit an application.
This is not the first time that the Krutogorovskoye field loses foreign investors at the last moment. Three years ago the Icelandic company Kleros Capital also planned to start coal mining there. It even came to drawing up pre-project documentation, but then the deal was frozen. As a reason, the fall in world prices for coal was mentioned, against which huge investments in infrastructure can not pay off. In particular, the experts estimated the construction of a quarry, a road and a terminal for 2 million tons of coal at the amount of about one billion dollars. Geologists working at the field also talk about the need to build a power plant and a berthing complex.
Nevertheless, there is reason to believe that Kleros Capital did not lose interest in the project. And the license to develop the Krutogorovsky deposit is likely to be issued before the end of the year.
"When Kleros Capital experts evaluated the potential of the field, they considered it promising," Mikhail Zarubin, an analyst with the Development Corporation of the Kamchatka Krai, said in an interview with EastRussia. - However, investments in infrastructure there really are required significant. As a result, Kleros Capital realized that they alone would not pull this project, and decided to find a co-investor. It was in this role that Tata Power acted. Icelanders are planning to develop the field together with an Indian company. Now, there really have been some hiccups with the filing of documents, but Kleros plans to enter the auction in December.
While there is no exact information on whose behalf the application will be submitted - Kleros Capital or Tata Power. According to sources close to the regional government, the scenario likely to be implemented after the signing of the agreements in Mumbai is likely to be implemented - an Indian company will compete for the competition, but there will be real investors for two.
As explained EastRussia in the subsoil management for the Kamchatka region, due to the fact that in October the auction for the right to develop Krutogorovsky field was not held, it was postponed to December.
- According to the order of the Federal Agency for Subsoil Use, the competition will be held 22 December 2017 year, - said the deputy head of the department Viktor Lopatin. - The deadline for submission of documents was postponed to November 21.
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