After acquiring a large coal property in Mozambique less than a fort-night ago, the State-run Indian steel major Steel Authority of India Ltd (SAIL) has once again geared up its activities for fresh acquisitions of overseas coking coal assets. Now it is through SAIL-Tata Steel Ltd JV (joint venture) called S&T Mining, whose main purpose would be scouting and acquisition of overseas coal assets to ensure continuous supply of coking coal, a key raw material in steel production.
S&T Mining, a joint venture between Tata Steel and SAIL, has already invited applications for prime coking coal assets with a minimum reserve of 100 million tones giving last date to submit applications is September 10. It is open to the option of stake purchase, long-term off take or any other arrangement to secure long-term supply of coking coal. Actually the JV, S&T Mining was formed in 2008 with an aim to secure, develop, and operate coal mines for its promoters, remained largely dormant all these years. "We will be getting increasingly active over the next few months at S&T Mining and will hopefully be in a position to take up new projects," Steel Authority of India Ltd (SAIL) Chairman CS Verma said recently in a TV Channel. With international coal prices at a rock bottom, analysts feel it is the right time to pick up coking coal assets, especially for the likes of Tata Steel and SAIL, to meet their ambitious steelmaking capacity enhancement plans. SAIL is raising its capacity to 23 mt by 2015 and Tata Steel is set to commission 3 MT capacity plant at its upcoming unit in Odisha's Kalinganagar by March 2015.
S&T Mining said it would certainly prefer mines in Australia. The company is seeking hard coking coal mines that will have an output of more than 2 MT of saleable coal per annum and a minimum asset life of 25 years. In particular, S&T Mining said it is interested in mines that are close to commissioning or one to two years from getting operative. SAIL and Tata Steel have captive coal mines, but both depend on largely imports of coking coal to meet their current requirement. SAIL relies on imports for 90 per cent of its coal needs, while Tata Steel imports 50 per cent of the coal it consumes. At present almost 80 percent of coking coal used by Indian steel industry is imported from Australia.
(Source: Excerpts from Economic Times)