JSW Steel has restarted coking coal mining in the US after a gap of almost three years. Operations in the mines located in West Virginia were suspended after coking coal prices dropped below production cost.
The recent rise in coking coal prices has made it viable for the company to restart production. Though JSW Steel will not import the coking coal produced in the US to India it will provide a financial hedge as it will be sold in the open market.
Seshagiri Rao, Joint Managing Director, JSW Steel, told BusinessLine that the US coking coal mine has started production and the plan is to ramp up production from 2.40 lakh tonne per annum to one million tonnes gradually.
Uptrend in price
Coking coal prices have increased to $200 a tonne from $76 in the last few years. With a strong demand and disruption in supply due to logistics issues there are no chances of it coming down any sooner, he added.
JSW Steel had invested $35 million to set up a prep plant (washery) with a capacity of 2.4 mtpa near the coal mine.
Going ahead, Rao said JSW would source raw coal produced by small miners in the neighbourhood wash it at the prep plant and sell it in the open market to reach the one-million-tonne target.
JSW Steel acquired the concession for nine coking coal mining in the US in 2010. These mines have total resources of 123 million tonnes and estimated reserves of 45 million tonnes in the area where drilling was already done.
Rao said that the company has no plans to restart iron ore mining in Chile that has been under care and maintenance for the last few years.
Dwelling on global plans, he said the Group wants to have 10 mtpa steel production capacity in the US and Europe put together.
“We have taken over 1.3 mtpa rolling facility in Europe for €80 million and will invest another €150-200 million in backward integration to raise its capacity to 1.5 mtpa,” he said.
The Group had already invested $150 million in modernising the existing one mtpa plate and pipe mill and another $350 million was pumped in for a slab making facility to complete backward integration at Baytown in the US.
“We have acquired 3 million tonne hot strip mill with one arc furnace and casting facility for $1 billion. These investments will take our capacity in the US to 4 million tonnes in two-three years, he said.
In all, he added the Group had invested $1.5 billion to reach 5.5 mtpa capacity.