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Suresh P. Iyengar

Mumbai, Sept. 2 The fixed price coal linkage for cement companies has been declining constantly and has dipped 22 per cent to 0.97 million tonnes in July against 1.27 million tonnes in the same period last year.

In June it was down 6 per cent at 1.04 million tonnes and in May and April it slipped 4.8 per cent each to 0.98 million tonne and 1.03 million tonnes.

Linkages are provided by mining companies to both core and non-cone industry, said Mr Rajan Kumar, Research Analyst, Centrum Broking.

Given the shortage of electricity, coal supplies for thermal power projects are assigned priority status, said a cement company official.

Mr Vinod Juneja, Managing Director, Binani Cement, said, “We procure a small quantity of coal through electronic auction, but the quality is inferior. We prefer to import it from Indonesia.”

The ash content is about 60 per cent in the domestic coal, while it is just 30 per cent to 20 per cent in the imported coal, he added. Coal accounts for about 65-70 per cent of the production cost of cement companies.

The recent fall in freight cost due to the correction in crude oil prices has encouraged many cement companies to consider coal imports. Moreover, the international coal prices are down from its recent peaks.

Freight cost is down 5 per cent to about $150 a tonne (c.i.f., Kandla port). “It costs about Rs 7,000 a tonne including transportation charges to our plants in Rajasthan,” Mr Juneja said.

Apart from the production constrains in some of the mines, the soaring demand from the priority sectors such as power has lead lesser allotment for cement companies, said a coal mining company official.

Heavy rains in August affected the mining operations at Singareni Collieries in Andhra Pradesh. The total coal production from 37 underground mines and 14 opencast mines was about 1.25 lakh tonnes a day dropped to 78,738 tonnes.

Similarly, unseasonal rain from mid-July at Kalimantan in Indonesia, the main coal producing region, has affected production. Key Indonesian producers such as PT Bumi Resources and PT Adaro reported to have delayed their shipments.

More Stories on : Cement | Coal

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