SAIL will increase dependency on imported coal to reap benefit of appreciating rupee and at the same time reduce off take of coal from domestic sources.
KOLKATA: Steel Authority of India Limited (SAIL) will increase dependency on imported coal to reap benefit of appreciating rupee and at the same time reduce off take of coal from domestic sources. In 2007-08, the country’s largest integrated steel producer will increase coal imports by 19% in volume terms, but its bill for such imports will rise by just 11.8%, even at a time when global coal prices in dollars have increased 14% over the past 10 months.
According to operational budgets for the current fiscal, SAIL will import 115.27 lakh tonnes of coal, against 96.50 lakh tonnes of actual imports in 2006-07, a 19% rise forecast. In the previous fiscal, the steel company’s coal import bill was Rs 6795.22 crore while by close of current year, the bill is expected at Rs, 7,600 crore, an increase of 11.8%.
In contrast, SAIL will reduce off-take from domestic sources from 39.02 lakh tonnes in 2006-07 to 34.13 lakh tonnes in the current year, for which its bill will come down from Rs 1,687.84 crore to Rs 1,460.53 crore. Till now, 80% of SAIL’s requirement of coal from the domestic market was met by Bharat Coking Coal Limited (BCCL), a subsidiary of Coal India Limited.
Officials in SAIL said that since the strategy was to maximise yields of hot metal from its blast furnace through greater efficiencies, the company would be looking at higher grade coking coal to feed its furnaces. Supplies of such coal were limited in the domestic market.
In the current year, SAIL is targeting to increase its production of saleable steel to 13.5 million tonnes from 12.6 million tonnes in the previous year, through higher operational efficiencies.
While global coking coal prices have been rising over the last two year, an indication of the salutary impact of the rising rupee on SAIL’s import bill can be gauged from its imports over the last three years.
In 2005-06, the company imported 90.35 lakh tonnes, while in the subsequent year it imported 96.50 lakh tonnes, an increase of 6% in volumes, but its total bill was up 16% from Rs 5,813 crore to Rs 6,795 crore.
In sync with this trend, SAIL is moving in to pick up ‘coal equity’ in mines overseas, particularly Australia. Last week, the Union ministry of steel, gave its formal nod to the company to invest in coal mines overseas. Steel minister Ram Vilas Pawan has directed SAIL to expedite investments in coal mines in Australia, some of the opportunities, which have already been identified in course of the recent visit of the minister down under.
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