Stung by persistent rise in prices of coking coal, public sector steel major SAIL is exploring the possibility of setting up a joint venture with Bharat Coking Coal Limited (BCCL) specifically for the rich Kapuria block in Jharkhand.
Top government officials said SAIL and BCCL are in advanced discussion to formalise the proposed joint venture.
“SAIL is exploring various options to augment availability of indigenous coking coal. One o the potential areas is the development of the Kapuria block of BCCL,” said an official, who did not wish to be identified.
BCLL is a subsidiary of Coal India Limited (CIL). SAIL's annual requirement of coal is around 16-17 million tonnes, out of which 4 million tonnes is accounted for through domestic suppliers like state owned Coal India Limited.
The bulk 12 to 13 million tonnes is imported.
SAIL is currently in the process of negotiating its annual coal contracts for imports and its chairman S K Roongta expects a two hundred per cent increase in long term prices.
“Despite the fact that we have captive iron ore reserves, the cost pressure is the steepest that the industry has ever witnessed. As opposed to $ 96-97 per tonne coal last year, prices will be around $ 300 per tonne this year," Roongta said.
"We remain committed to holding our price line till July but the cost of coking coal for us inclusive of freight will see an increment of around Rs 8-9000 per tonne. In the longer term some of it will have to be passed on," Roongta added.
Earlier this month, a five-member delegation headed by minister of state for steel Jitin Prasada visited Australia to explore access to coal mines there. The delegation visited coal rich states like New South Wales (NSW) and the state government there has assured coking coal linkages from NSW to India.
India imports about 22 million tonnes of coking coal annually.
Steel companies have attributed the high prices of finished product to rising cost of iron ore and coking coal.