Coal projects provide growth scope for mine developers

With the central and state utilities expected to invite bids for coal mining in the near future, domestic mine developer and operators (MDOs) with a good track record will have big growth opportunities. The MDO route presents a large growth opportunity for domestic engineering, procurement and construction (EPC) players with a demonstrated relevant track record, subject to attractive mine economics," the rating agency said in a statement. Financial Advisory which means a lot to a Financial trader and we can do a best with your investments with all mandatory work skills subscribe us now and get two days Free Trial >>http://www.ripplesadvisory.com/free-trial.php

The credit profile of the appointed MDOs during the mine development phase is perceived to be risky, owing to high CapEx and negative-to-low free cash flow. However, the credit profile is likely to improve gradually over the mine operating period as the cash flows are negative to low till the annual production reaches the peak production capacity, and thereafter turn positive. 

Considering the high CapEx during the development phase, it becomes extremely important for the operator to achieve the envisaged strip ratio and/or operational efficiencies to recover the CapEx along with a reasonable return. According to statistics, as of May 2017, one out of the four MDOs appointed by central and state power utilities in the last 21 months has commenced mining operations and another two are likely to do so in FY18. The remaining MDO will start mine development in FY19.