In what may open the floodgates for mineral acquisitions overseas, Indian steelmakers led by state-controlled Steel Authority of India Ltd are mulling a consortium on the lines of Japan, Korea and China as they look for coking coal and iron ore abroad.
Companies like Tata Steel, JSW, JSPL and RINL along with SAIL have been discussing the prospect of collaborating ever since the possibility of acquiring mines in Afghanistan came up. It appears that the arrangement may well extend beyond the Afghanistan foray.
A loose consortium of steel, power and coal companies, ICVL, is already active in India. But it has had limited success due to differences among the participants: steel companies look for coking coal, while power firms want thermal coal.
"We have lost many good opportunities in the past only to realise that a consortium approach with other steel coompanies is needed for the long term," said CS Verma, chairman, SAIL. "It will be wrong to say ICVL has not done anything (we are getting mines in Indonesia through it) but the group has other companies too who are not interested in coking coal so the target is different."
A consortium of steel companies is likely to have a better strike rate especially when competing with similar firms from China and Japan that are famous for their aggressiveness.
"We have been in talks with Tata, JSW and RINL for exploring the Hajigak mines in Afghanistan but wherever we go we will face consortiums from China and Japan, so we need one for ourselves as well. China is a big threat and is everywhere," Verma said.
SAIL imports nearly 10 million tonnes of coking coal or 70% of its overall requirement every year — which will only rise as SAIL increases its steel output.