Tata Steel has clarified that its decision to ban the import of coking coal from Russia is still in force and has not made any purchases from Russia after the official announcement severing all business ties with that country in April for invading Ukraine.
“Tata Steel would like to issue a clarification in view of the incorrect information floating around with respect to importing coal from Russia,” said the company.
On April 20, the company said it would stop doing business with Russia and ensure business continuity at all its steel manufacturing sites in India, the UK, and the Netherlands by sourcing alternative supplies to end dependence on Russia.
However, in March, a deal to supply 75,000 tonnes of PCI (pulverised coal injection) coal was finalised and the contract became effective weeks before Tata Steel’s April decision.
The shipment was received in May to honour the business commitment made before the announcement, it said.
‘No fresh purchases’
“Post the announcement, Tata Steel has not made any fresh purchases of PCI coal from Russia. As a responsible corporate, we have and will continue to remain committed to our stated stance and resulting obligations, “it added.
Tata Steel’s clarification comes amid market expectations that the company will not benefit from the fall in coking coal prices.
In a report, Motilal Oswal said Tata Steel’s standalone first half EBITDA this fiscal is expected to contract 66 per cent over last year, driven by lower average selling price, lower demand, peak coking coal costs and a high base effect.
“Indian operations will not benefit from lower iron ore costs or discounted Russian coal. Hence, the cost structure will only benefit from the reduction in coking coal prices, and that too for 70-75 per cent of the requirement as India operations have captive coking coal supply,” it said.
Positive outlook
Meanwhile, India Ratings and Research has revised Tata Steel’s outlook to positive from stable, despite likely acquisition outflows and an annual capital expenditure between ₹10,000 crore and ₹12,000 crore. The rating is supported by linkages with and the strong financial flexibility of its sponsor, Tata Sons, it said.
The European operations are also likely to maintain positive free cash flows, benefiting from structural changes, including lower competitive intensity and the recovery of demand from the auto sector, it added.
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