Minerals business achieves milestone of executing 1 million MT coal supply under a single order
October 31, 2017
Tata International’s Minerals business achieved a milestone in September 2017, completing the supply of 1 million MT of coal to a Vietnam customer.
The contract was awarded to Tata International by VietNam Electricity (EVN) in February 2017. Valued at approximately US$ 62 million, it was the single largest coal supply contract awarded by any company in Vietnam at the time.
The prestigious tender was won in collaboration with Franky Consortium, a mining and construction company in Malaysia. This order will be utilised for the commercial phase of operations of EVN, which is the largest power company in Vietnam.
The size of the contract meant that it came with its share of complexities. Such a large quantity of coal required multiple shipments to fulfil the order. However, while the coal was transported on large cargo vessels, lightering to smaller vessels was required to deliver the coal to the plant.
The coal was sourced from Indonesia and had to be transshipped to the customer. This was the first time the team undertook transshipment business and executed the same successfully. The team had earlier geared up to handle complex operations such as these and had familiarized itself with port and vessel operations through visits to a bulk carrier vessel. A total of 36 shipments were executed, powered by dexterous Operations and Documentation teams.
Enabling a smooth ride financially was a basic but challenging requirement as this entailed processing of a large number of Letters of credit through multiple banks. The Finance team provided robust support by identifying and building relationships with suitable local channels to ensure that transactions and transfers were done expeditiously.
A job well done
The team completed the contract on schedule, much to the delight of the customer. As a testimony of its appreciation of the service provided, EVN has extended the contract by 20 percent. The team is now delivering an additional 200,000 MT of coal in October and will strive to improve further based on valuable learning from the previous supplies.
This milestone helps strengthen Tata International’s position as a reliable supplier in South Asia for the energy industry. The team is now looking at growing its presence in Vietnam and has recruited a trader based in the country to grow its business, including the possibility of setting up a distribution hub in the future.
EVN has an installed electricity generation capacity of 23,579 MW and a transmission network of 21,883km. With the new power plant at Duyen Hai, EVN explored the possibility of reducing its cost of power generation with imported coal and tendered out its coal requirements during the commissioning stage of the power plant.
The successful completion of this contract will be an important milestone in Tata International’s journey to be a significant coal player in South Asia and a globally significant player in the Energy business by 2025.