In a blow to Coal India, the steel ministry is set to approach the Cabinet Committee on Investment (CCI) to hive off coking coal mines from the company and set up a fresh state-run entity to supply the fuel exclusively to domestic steel companies.
In a recent note to the CCI, the steel ministry has pointed out that given the external risks involved in respect of increasing dependence on foreign markets for sourcing coking coal, there is a pressing need to steadily increase supply of the fuel from domestic mines.
Since Coal India Limited’s (CIL) subsidiary Bharat Coking Coal Limited (BCCL) owns all coking coal blocks, the steel ministry’s demand amounts to de-merging of this company from CIL.
Pitching for creating another massive public sector company at the expense of the coal ministry, the steel ministry has argued that business-as-usual approach in treating the raw material needs of the domestic steel companies may trigger trouble for them. “The coking coal mines currently lying with Coal India may be hived off and a separate PSU may be formed to focus exclusively on developing coking coal assets,” the ministry suggested in the note to the CCI.
Earlier in a note in July to the Prime Minister’s Office, the ministry suggested that the country would need 89 million tonne of coking coal by 2016 to 17 and another 173 by 2025 to 26. Arguing that over 30 MT of lower grade coking coal annually is being supplied to the power sector due to lack of adequate washing capacities, the ministry said instead efforts should be made to divert this coal to the steel plants.
BCCL operates 81 coal mines,including 40 underground ones. It has registered a production of over 30 MT of annual coal production and has targeted nearly 40 MT by the end of the twelfth five year plan period. With ever increasing demand of steel in the country the requirement of coking coal is projected to increase from 69.47 MT to 85.06 MT at the end of 12th and 13th Plan period, the Planning Commission’s Working Group on the 12th Plan has suggested.
India, which is considered to the world’s third largest importer of coking coal, shipped in over 30 MT coking coal last year. Besides, weakening rupee and intermittent paucity of supply has rendered coking coal imports a costly exercise.
While the steel ministry has estimated that coking coal demand would be 94 MT by 2016-17 and 200 MT by 2025-26. The ministry says that if the GDP grew by 7 per cent then the country should brace for steel production of 202 MT by 2025-26 and 233 MT if the GDP growth touched 8 per cent.
“I fail to understand the rationale behind the proposal and how do the steel firms benefit from the proposed de-merger? They may produce steel, but have little technological wherewithal to operate mines, especially the underground ones,most of which are with the BCCL. They would benefit themselves a lot by developing coal washeries in the country rather than spending crores of rupees for importing coking coal,” Coal India chairman S Narsing Rao told The Indian Express.
Source:- /indianexpress.com
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