India’s steel mills - those with coke ovens and blast furnaces - are pitching for long-term coking coal linkages “through the auction route,” while they have sought the Centre’s intervention in bringing down the notified price of domestic coking coal “in view of quality parameters”.
In a letter to the Coal Secretary, Amrit Lal Meena, the Indian Steel Association has sought that the reserve price for linkage auction (mines) be equal to the notified price of coal, that is, it should not include any mark-up premium over the notified price.
Long-term investment commitments by steel mills have also been hit by the absence of raw material support and lack of washery infrastructure, the association, that includes PSUs such as SAIL and RINL, and private players such as JSW (the country’s largest steel maker by volume), Tata Steel, JSPL and AM NS, said.
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Coking coal imports in FY22 was 56 million tonnes – amongst the largest in the world – valued at nearly $15 billion. Coking coal is a key raw material in steel manufacture and India is the second largest producer of crude steel, with an annual capacity of 154 mt.
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Push for washeries
In the letter, the Association has requested coking coal linkage from Bharat Coking Coal Ltd (BCCL) and Central Coalfields Ltd (CCL) under the ‘Mission Coking Coal’ initiative.
It further noted that in FY22, BCCL and CCL together produced 46 mt of coking coal, of which 5-6 mt was supplied to the steel sector, and the rest diverted to the power sector, in the absence of adequate washery capacities and the “burgeoning energy requirements of the country”.
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“It is noteworthy that in case adequate washery capacities were available in the country, nearly 15-16 million tonnes (mt) of additional washed coking coal (yield of 33 per cent) could have been generated for the sector, thereby reducing imports. The Indian steel industry is willing to invest in establishing modern washeries with the latest technology, provided it is assured of adequate supply of raw coking coal, which is currently diverted to the non-steel sector,” the letter states.
Similarly, plants manufacturing steel through the blast furnace route, should be granted long-term linkages via the auction route for high gross calorific value that includes high ash coal from Eastern Coalfields Ltd (ECL), South Eastern Coalfields Ltd (SECL) and Western Coalfields Ltd (WCL), which could be a replacement for PCI coal.
Nearly 16 million tonnes of pulverised coal injection or PCI was imported last fiscal.
Similarly, Ranigunj Coal Field of ECL produces high calorific value high-ash coal, which can be washed to a lower ash content and can substitute PCI coal, the millers suggested.
“At the projected steel capacity of 300 mtpa in 2030-31, the demand for coking coal is likely to touch 161 mt and the import bill will swell to $35-40 billion,” it said.
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Not happy with auctions
The steel mills have pointed out that the coking coal auction policy has “moved in the opposite direction” and previous practices such as exclusive E-Auction for the steel sector was done away with last year (2022).
Coal from BCCL and CCL is being auctioned with spot/ small quantity buyers, it said, pointing out that in the last few spot e-auctions, it was observed that many smaller players bid for 50 /100 tonnes of washery grade coals, which are best suited for coke making.
Steel players are deprived of such allocations due to high to extremely high premiums, the steel mills said in their letter.