The Hindu Business Line : Steel PSUs eyeing coal blocks abroad

IN an effort to ensure long-term coal supply, public sector steel companies are looking at overseas coal blocks and may go in for their own mining in future.

For the same purpose, the companies are also contemplating joint ventures with Coal India Ltd (CIL). Similar arrangements are also considered with Indian Railways for making easy availability of rakes for supply of iron ores to the steel plants, said Ms Binoo Sen, Union Steel Secretary, here.

She told presspersons that raw material availability was a crucial factor for the steel companies. The cost and quality of the raw material were also important and for that long term planning is necessary.

In this context, she talked of the coking coal shortage for the steel companies. At present, she said, two Australian companies are supplying coal to Steel Authority of India Ltd (SAIL) and Rashtriya Ispat Nigam Ltd (RINL) but they have defaulted as their mines faced technical problems.

"SAIL and RINL are exploring the option of acquiring overseas coal blocks, which can be mined in future. We are following the Chinese model. Chinese companies have already acquired several overseas coal blocks. We can acquire blocks in Canada or the US," Ms Sen said.

It may be noted that senior officials of SAIL and RINL have recently visited the Australian coal companies and tried to broadbase their coal supplies. Currently three Australian coal majors namely BHP, MIM and Anglo Coal are supplying to SAIL and RINL. Sources said that supplies to RINL by these three companies were only up to 88 per cent of their total commitment. In 2002-03, SAIL's total coal requirement was 11.8 million tonnes, which is almost one million tonne a month. With the growth in steel production, monthly demand for coal in 2003-04 should be around 1.2-1.3 million tonnes. In 2002-03, SAIL's total payout on account of coal was Rs 3,904 crore.

On the other hand RINL's total coal requirement in 2002-03 was 2.5 million tonnes. This went up by around 10-12 per cent due to the growth in steel production at Vizag Steel Plant.

Ms Sen further said her department held talks with the representatives of the coal ministry and it was urged that CIL should increase its production. "It was learnt that Coal India will take at least an year to increase production," she said.

She talked about infrastructure difficulties faced by the domestic steel producers, which included non-availability of railway rakes. "SAIL has come forward with some suggestions for rakes. Both SAIL and Indian Railways should work out some of an arrangement to overcome this problem," she added.

Regarding coal shortage, he asked steel companies to innovate and use other grade of coal also. In this context he mentioned about fines, which were dumped by IISCO in Goa and now being exported to China at a premium.

"Essar and Jindal are trying other grades of coal. The government have convened a meeting of the steel producers on March 15 to discuss the raw material position of the industry," she added.