Acquisition of Coking Coal Assets Abroad 'Imperative': Steel Ministry

As a coking coal crunch in India may lead to annual imports of 180 million tonnes by 2033, acquisition of assets abroad becomes "imperative" for public and private steel companies, according to a Steel Ministry report.

In case of coking coal, import dependence will rise significantly despite the best results from the domestic industry as its capacity to supply coking coal is not likely to increase beyond 20-25 MT, the report said.

"This means, the industry will have to import about 180 MT coking coal annually by 2032-33 in the 7 per cent GDP growth scenario and much more if the GDP growth rate is higher," it said.

"Due to limited availability of quality coking coal assets in the country and the oligopolistic control over global coking coal market by a few companies, acquisition of suitable coking coal assets abroad becomes imperative for the domestic steel industry."

Imports of dry fuel, including coking coal, increased 17.9 per cent to 171 MT in 2013-14, from 145 MT a year ago amid widening demand-supply gap in the country.

As per the 12th Plan documents, coal demand-supply gap is estimated to further rise to 185 MT in 2016-17.

About 24 per cent of coking coal is mostly imported from Australia and is used in steel production.

"Though a number of companies from the private sector as well as the public sector (including ICVL, a JV of public sector companies, viz. SAIL, RINL, NMDC and CIL) are in process of identifying and acquiring coking coal assets abroad, the efforts need to be more focused and required to be supported by the government through diplomatic dialogues," the report said.

The government may also consider holding diplomatic discussions with coal-rich countries to sign MoUs to get rights to assets which they can then offer to the Indian private and public sector companies on a PPP (public private partnership) model, it added.

It stressed that these mines can then be developed to export coal back to India on long-term basis.

"In any greenfield investment, the Indian company and the government should insist that exports are allowed to take place duty free and at cost," it said.

India has 5.31 billion tonnes and 26.45 billion tonnes of proven prime coking coal and medium coking coal reserves respectively.