In the first PSU steel-maker, SAIL has placed orders for 80,000 tonnes of washed Russian coking coal. The shipment expected to arrive within the next few weeks, will land at “one of the eastern ports” of the country, sources in the Steel Ministry, told BusinessLine.

Those aware of the matter say, payments will be made only after the shipment lands on Indian shores. The settlement mechanism is yet to be decided.

Discussions are underway for a second shipment too.

“Banks have been pushing for Dirham or Yuan settlement. While the push from SAIL’s side is for a Rupee – Rouble settlement mechanism, banks have so far not been very keen on it, citing various reasons like link issues and a cumbersome processing,” said an official.

Every time SAIL has to send a shipper from India. It needs a clearance from the Ministry of Shipping too. Sources say, the steel-maker has also reached out for “a blanket clearance” to ensure easy shipments of Russian coal.

Price and Quality

In fact, SAIL will reportedly be the same price as an Australian coking coal – around $200 -225 per tonne. The price will also include some additional freight and insurance charges which vessels are asking for bringing in shipments from Russia.

In order to take care of concerns over high ash content in Russian coking coal, SAIL has reportedly asked for “washed coking coal”, so that it suits the company’s specifications.

Concerns over sanctions

“There are some concerns over sanctions on some of the entities which could delay the shipment. So, the call is to make payment only when the shipment arrives at the port. By that time, the settlement mechanism with the bank(s) will be worked out too,” a person aware of the development said.

Sources say, the PSU steel-maker had been in discussions with Russian suppliers since February and things got delayed as sanctions were imposed on Russia by the Western nations including European Union.

Settlement mechanisms which included getting Letters of Credit from banks had also cropped up as an issue as some Indian ones refused payments beyond Dollars and Euro; while some were hesitant in going ahead with dealings with Russian entities.

Another hurdle that SAIL faced came in terms of getting vessels carrying Russian coal. Many operators raised concerns over insurance claims which delayed the process.