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New Delhi, May 30 The country’s largest PSU steel-major SAIL has initiated discussions for bringing in coking coal from Russia at discounted rates.
According to senior officials of the PSU, the company “is trying to get some consignments on a trial basis” and if found in order “we will try to take more coal” (from Russian suppliers).
Typically, the steel-maker has long-term agreements with coal suppliers, but does not have any with Russia at the moment. Apparently, talks have begun now for getting in consignments.
“We are trying to get some consignments on a trial basis and if these are found to be in order then we will try to take more coal from Russian suppliers,” the SAIL official said.
Incidentally, Russian officials had met their Indian counterparts and some private and PSU steel mills in April to iron-out an impasse over import of coking coal. Issues raised in the meeting include transport of coal, the price and also quality concerns.
Russian officials have reportedly asked Indian mills and officials to visit the European nation and sort out issues.
India has not imposed any sanctions on Russian imports. Pulversied coal imports – from Russia – though (used under the pulverised coal injection system of steel-making) continue.
Imports of coking coal
Imports make up for 85 per cent of India’s coking coal requirements and nearly 4.5 million tonnes came in from the European nation before the Russia–Ukraine war-hit supply plans.
India and Russia signed a memorandum of understanding in October last year for a strategic partnership in mining and steel, with special focus on coking coal.
Russia was India’s sixth largest supplier of coking and thermal coal.
“We are trying to get it (coking coal consignments) now but the only problem is there are some payment issues....we are trying to resolve the concerns and the moment it happens we will surely start taking from Russia,” the official said.
Payment concerns
According to the SAIL official, the company is working on resolving “payment issues” and “some other ones like insurance of vessels”. Sources say discussions have centered around whether it will be a rupee-rouble trade or a dollar trade. This concern has also led to banks delaying opening of Letters of Credit (LCs).
“There are some payment issues with them (Russia) and there are some issues relating to insurance of vessels and things linked to that. We are working towards resolving them,” the official said.
Energy costs
SAIL is anticipating coking coal prices per tonne to increase by 15 per cent q-o-q in Q1FY23 (April–June). The company’s average coal consumption cost for January–March period stood at $385-400/tonne.
According to the official, the company is trying to maximise the consumption of lower cost PCI and indigenous coal in the overall fuel mix. It is also trying to source 2.5 million tonnes from Indian sources, including from the Tasra mines and from Bharat Coking Coal Ltd. The company is also anticipating a higher quantity from mines under its ICVL joint venture in Mozambique.
SAIL usually carries 35 days of inventory of coking coal, including stock at ports and plants.
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