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India Plans to Increase Coking Coal Supplies from Russia, Mozambique to Beat Price Volatility

India Plans to Increase Coking Coal Supplies from Russia, Mozambique to Beat Price Volatility

As coking coal prices turn volatile, the country’s largest state-owner steel maker, Steel Authority of India Ltd (SAIL), is looking to ramp up sourcing from Russia and also up production at its own overseas mines in Mozambique.

As coking coal prices turn volatile, the country’s largest state-owner steel maker, Steel Authority of India Ltd (SAIL), is looking to ramp up sourcing from Russia and also up production at its own overseas mines in Mozambique.

Coking coal is a key feedstock for steel-making. 

According to Amarendu Prakash, Chairman and Managing Director, SAIL, four shipments of coking coal from Russia – each shipment of 75,000 tonne – have already come in Q1 FY24 (April-June); and another four have been (totalling 300000 tonne) will be sourced for the period ending September 30. 

“We have begun sourcing from Russia over the last two to three quarters. In Q1, we got four shipments of coking coal; and a similar number (of shipments) are expected in Q2,” he told businessline on the sidelines of the ‘Indian Steel Markets Conference’. 

Typically, such coking coal is indexed (priced) against Platts and Argus. And following long term negotiations these are sold at a discount over spot rates. 

India, the second largest crude steel maker globally, is also the largest coking coal importer with nearly 56 million tonnes (mt) of shipments coming in last fiscal. 

Russia is now amongst the top three coking coal suppliers to Indian steel mills. 

Mills reportedly have been buying coking coal from the nation at 20-30 per cent discount over spot rates. 

Price of hard coking coal (at Paradeep), from Australia, is around $348 per tonne as on Thursday. Prices have gone up by nearly $100 per tonne over the last one month. 

“There will be some pressure on margins especially when raw material prices move up. And we are working towards mitigating the same. While (increasing) sourcing from Russia is one, we are also working on increasing production from Mozambique and our own captive coal mines here,” Prakash said. 

Other counties from which SAIL sources coking coal include Australia, the USA and Indonesia. 

Mozambique Ramp Up 

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In Mozambique – where SAIL owns coal mines through International Coal Ventures Ltd (ICVL) – plans are afoot to ramp up production capacities to 4 million tonnes per annum (mtpa) from the existing 2 mtpa. 

The ICVL is a joint venture company of SAIL, Coal India, Rashtriya lspat Nigam Limited (RINL) and NMDC Limited (NMDC); and was formed with the objective of acquisition of coal assets in overseas territories to secure coal supplies on long term basis primarily for their own use. 

The company acquired one operating coal mine and two green-field coal assets located in Tete Province of Mozambique.

“We are preparing the DPRs for ramp up capacities at Mozambique…..at least double capacity over the existing 2 mtpa. Investment details are being worked out. The ICVL is a profitable venture,” he said. 

Coal sourced from these mines will primarily for SAIL and RINL’s captive consumption. 

The Hindu Businessline

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