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Kolkata , Oct. 11

A DROP in world steel production and oversupply of coking coal, along with an improvement in steel making technology, may contribute to the downward push in the prices of metallurgical grade coking coal used by the steel plants for making coke.

Experts at the Indian Institute of Technology, Kharagpur say the emerging market phenomenon may weaken the competitive strength of domestic coking coal manufacturers vis-à-vis imports. Domestic coking coal producers are already facing the threat of becoming extinct as there is an increased tendency to go for imported coal by the consumers.

It is thus necessary for local coking coal producers to look into the different aspects of competitiveness with respect to the competitors, mainly the cost of imported coal.

In a paper titled `Identification of strategic issues related to Indian coking coal sector in a liberalised environment,' the experts suggested that the steel producers, instead of relying totally on imported coal, should go for blending imported coal with indigenous coal at varying proportions and avoid the drainage of foreign capital.

Incidentally, the experts have tried to arrive at a benchmark cost, to become competitive with imported coal. The benchmark cost has been calculated by comparing with the imported coal, as imported coal is found to be the immediate competitor considering the availability of quality criteria.

According to them, the objective is to identify that operating cost which will give steel producers the cutting edge against competitors.

Imported coking coal has nine per cent ash and an energy value of 6,500 k Cal. On the other hand, coal produced by domestic mines gives 17 per ash and of 5,500 k Cal. These two different qualities of coal can only be compared if some equivalent factor is developed.

However, for profit making operations, the average raw coal cost has to be below Rs 1,391 per ton for economic viability of a coking coal mine, they felt.

It was pointed out that the availability of coking coal reserve in the country is not plentiful. Also, the reserve of good quality metallurgical grade coking coal lies between 300 to 600 meters dept from surface, which implies that the production of this variety of coal has to be through underground mining methods.

Moreover, there is a lack of long-term perspective planning for sustainable development of the coking coal sector. Because of its high operating cost, low productivity and non-availability of suitable equipment base for mechanisation, it is finding hard to compete with imported coking coal and the chances of this variety of coal being replaced by imported coal is very high.

Hence an increasing trend of import of coking coal is observed, thereby jeopardising the growth of the domestic coking manufacturing sector.

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