PSU steel-major SAIL (Steel Authority of India Ltd) is planning to more than double capacities – to nearly 4.5 million tonnes per annum (mtpa) — at its Benga coking coal mines in Mozambique. The expansion of its captive mines in Africa is part of the strategy to ramp up coking coal supplies, a key feedstock material in steel making, and shield itself from price volatalities.
Investments into the segment is expected to be about $150-200 million, spread over a three-four year period, sources aware said.
So far, SAIL has been relying on imported coking coal, including from Russia, apart from domestic supplies of Coal India.
Global tenders for bringing in mine development operators at Mozambique has been floated recently by ICVL (International Coal Ventures Ltd), the special-purpose vehicle owned jointly with NMDC, RINL, Coal India and NTPC. SAIL has a majority stake in ICVL at 47 per cent.
In FY24, the production from Benga was around 1.24 mt, as per the annual report of another PSU major, NMDC. The annual capacity of the mine is around 2 mtpa.
“We are looking to double production at Benga as part of our strategy to secure coking coal resources. The expansion should take place in another three-four years. And most of the mined coal will be for captive consumption,” Amarendu Prakash, Chairman, SAIL, and Board Member of ICVL, told businessline on the sidelines of the annual conclave of the Indian Steel Association (ISA).
The tender documents state that the scope of work includes extraction of 375,000 tonnes of coal (+/- 20 per cent) per month; which works out to 4.5 mt; apart from other requirements like top soil removal, loading of such coal and so on.
SAIL, in the annual general meeting (AGM), is also seeking shareholder nod for entering into long-term supply arrangement with Minas de Benga Limitada (Mozambique) (MBL) – a foreign JV company of ICVL engaged in producing and supplying coking coal. This would be a related-party transaction.
“ICVL and MBL, being part of SAIL group companies, ensure consistent flow of desired quality and quantity of coking coal ... (with) the aggregate value of the above transactions from April 1, 2024, till the AGM to be held in FY26 is estimated up to ₹6,000 crore. These transactions will not only help SAIL manage manufacturing operations smoothly, but also ensure consistent flow of desired quality and quantity of Prime Quality Washed Benga Premium hard Coking Coal,” it said in the notice.
Apart from Benga, there are two other mines with ICVL – Zambeze and Tete East. The two are greenfield ones.
For SAIL, the average imported coking coal cost in the April-June period was ₹24,500 per tonne; while indigenous coal was around ₹13,500 per tonne. Average cost was ₹23,000 per tonne.
Critical mineral mission
Prakash said SAIL is willing to participate in the Critical Mineral Mission as the mission’s scope expands in the coming days. “As Critical Mineral Mission expands and things get discussed, we will look at opportunities for exploring something on SAIL’s part,” he said.
The mission aims to secure the country’s supply chain in minerals such as lithium, cobalt, copper, vanadium, among others, by ensuring the mineral’s availability from domestic and foreign sources.
So far, SAIL has been looking at minerals which are used for steel making, he said, adding that critical minerals is a separate area. “We are not into that space (critical mineral) till now, but since the government has announced Critical Mineral Mission, will just explore there. We will look at it.”