The Hindu Business Line : Natural gas does not find favour with Tata Steel

AT a time when several major integrated steel plants are queuing up for natural gas linkage to reduce their rising coal bill, Tata Steel has discounted the importance of natural gas in steel making.

Having rich captive sources of metallurgical coal in West Bokaro and Jharia, the company does not consider that gas has any role to play in the steel industry now and in the near future.

Only a fortnight ago, at a press conference in Kolkata, GAIL India Ltd officials expressed their interest in exploring opportunities to sell gas to Tata Steel along with a host of other industries, which are located along the Jagdishpur-Kolkata grid.

But, the Tata Steel Deputy Managing Director, Dr T Mukherjee, told Business Line that they did not see gas becoming a cheaper option and that it would not replace coal. "We are not in discussion with GAIL for gas supply," he said.

Apparently, GAIL had reasons to be optimistic about its prospects in Tata Steel because SAIL and Vizag Steel, the two other major integrated primary steel makers in the country, have been looking at natural gas in an effort to reduce the coal bill.

Both SAIL and Vizag Steel do not have captive coal mines and depend largely on imports to meet their requirement of metallurgical coal, which is in short supply globally.

While SAIL gets more than 70 per cent of its coal needs through imports, the share of imported coal goes up to 90 per cent of the total requirement in case of Vizag Steel.

Gearing up to take advantage of the proposed natural gas grid particularly for its Bokaro and Durgapur steel plants, SAIL is on the verge of signing a long-term supply pact with GAIL vis-à-vis all four integrated steel plants. Vizag Steel is also banking heavily on gas linkage from the Krishna-Godavari basin for capacity expansion by 2007.

But for Tata Steel, the situation is different. Its coal import forms just 40 per cent of the total requirement. It is used mainly for blending. This apart, the company may have access to the cheapest coal in the industry.

"As far as the use of gas in new steel-making capacities are concerned, the long term availability of gas and hence the sustainability of steel-making operations using gas in India, is yet to be established," the company said, adding that "natural gas may find an application in areas like material handling, transportation and heating in steel industry".

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