SAIL plans separate entity to handle coal

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New Delhi, July 29: Public sector steel major Steel Authority of India Ltd (SAIL) is planning to float a new company to meet its coking coal requirements through coal contracts and acquisition of prospective mines in overseas markets.

The new company, which will act as the overseas business arm of SAIL, would function separately from proposed joint venture company that SAIL and Coal India are planning for developing dedicated coal linkages.

“A large part of our coal requirements are currently being met through imports. We have tried different measures to secure guaranteed supplies of coal earlier also. Creation of a new entity all together for meeting coal requirements is also being considered by the company,” SAIL chairman V S Jain told FE.

He said SAIL was also talking to CIL for a joint venture company but nothing definite had yet emerged from the proposal. SAIL wants to form the JV with CIL’s overseas subsidiary, which is yet to be created.

It is looking at quick solution for its coking coal requirement as domestic supplies have become erratic. Even at present SAIL meets 60% of its 10 million tonne annual coal consumption through imports.

Mr Jain said with SAIL planning to expand steel capacity to 20 million by 2011-12, linkages to dedicated coal supplying areas would become more important.

He said the new company would not only source guaranteed supplies of coal through short-term and long-term contracts but would also explore the possibility of investing in coal fields abroad with minority interest and even acquire good properties.

SAIL had begun the hunt for overseas coal mines some time back in Australia but in the absence of good offers and properties its exercise had failed to take off. The proposed company would give a dedicated character to this exercise. SAIL has already begun afresh scouting new properties in Australia, New Zealand and Russia.

Mr Jain said CIL may be involved in the proposed company, if it so desires, at a later stage.

SAIL has also begun talks with Bharat Coking Coal Ltd (BCCL) to enhance indigenous coal production.

Meanwhile, the steel major announced on Friday that its board had approved the proposal for installation of a new slab caster with associated facilities for steel melting shop II of its unit, Bhilai Steel Plant (BSP) at an estimated cost of Rs 520 crore.