SAIL-Tata Steel JV seeks to buy overseas coal assets
KOLKATA: Less than three weeks after acquiring a large coal property in Mozambique, Steel Authority of India Ltd is looking for more. Together with Tata Steel Ltd, the state-run company is scouting for fresh acquisition of overseas coal assets to ensure continuous supply of coking coal, a key raw material in steel production.
S&T Mining, a joint venture between Tata Steel and SAIL, has invited applications for prime coking coal assets with a minimum reserve of 100 million tonnes. It is open to the option of stake purchase, long-term offtake or any other arrangement to secure long-term supply of coking coal. The last date to submit applications is September 10. The JV, formed in 2008 to secure, develop and operate coal mines for its promoters, has remained largely dormant all these years. However, that is clearly poised for change. “We will be getting increasingly active over the next few months at S&T Mining and will hopefully be in a position to take up new projects,” SAIL Chairman CS Verma said recently.With international coal prices at a rock bottom, analysts feel it is the right time to pick up coal assets, especially for the likes of Tata Steel and SAIL, both hungry for more coking coal as they expand steelmaking capacity.
While inviting expressions of interest from prospective consultants and owners, S&T Mining said it would prefer mines in Australia. The company is seeking hard coking coal mines that will have an output of more than 2 mt of saleable coal per annum and a minimum asset life of 25 years. In particular, S&T Mining said it is interested in mines that are close to commissioning or one to two years from getting operationalised. SAIL and Tata Steel have captive coal mines, but both depend on largely imports of coking coal to meet their current requirement. While SAIL relies on imports for 90% of its coal needs, Tata Steel imports 50% of the coal it consumes. Imports are likely to go up as SAIL is raising its capacity to 23 mt by 2015 and Tata Steel is set to commission 3 mt capacity at its upcoming unit in Odisha’s Kalinganagar by March 2015.