Steel min eyes stakes in Aussie coking coal mines

Written by Economy Bureau | Kolkata, Aug 27 | Updated: Aug 28 2008, 05:47am hrs
The steel ministry is keen that the government holds equity in Australian coking coal mines so that it can tackle the shortage when further steel capacity comes in place.

Minister of state for steel, Jitin Prasada, said he had visited Australia in July and had discussions with the government there regarding acquiring stakes in coking coal mines in that country.

In Australia, we had a government-to-government discussion on matters relating to holding stakes in coking coal mines there, Prasada said.

He said: Many companies are trying to acquire coking coal mines overseas, but the government owning mines abroad would be a better option for upcoming steel plants.

Government-owned SAIL, RINL, CIL, NTPC Ltd and National Mineral Development Corp Ltd have formed a mega SPV with a warchest of $2.7 billion to hunt coking coal assets abroad.

Prasada did not make it clear whether taking up stakes would be through a new venture other than the SPV already formed.

According to government estimates, India would require to import around 120-130 million tonne of coking coal for a steel capacity of 150m tonne per annum by 2020. In 2006-07, India imported 23m tonne coking coal and 5m tonne of coke.

Prasada said capacity addition is crucial in controlling steel prices and India has to continue with a low-price syndrome for steel.

Members of the Merchants Chamber of Commerce (MCC) said even as prices of long products and ingots fell by 25% in the last one month, there has not been any correction in iron ore prices.

Iron ore prices, at present, are Rs 7000 per tonne at pitheads, although the cost of mining of one tonne of ore does not exceed Rs 700. The government should check ore prices in the way it had checked steel prices, Anupam Shah, MCC president, said.

Prasada said although the steel ministry has taken steps like imposing 15% export duty to slow down iron ore exports, imports would continue as long as iron ore fines are not used in the domestic steel industry.

He said Kudremukh Iron Ore Co Ltd has come up with hemitisation technology to use iron ore fines in steel making and the minsitry would help steel makers make a headaway with the technology.