PTI reports that the Steel Authority of India Ltd has agreed to pay a 40% higher price for its coking coal procurement from Coal India in 2008-09. SAIL would be paying prices equivalent to USD 150 a tonne in 2008-09 compared to a price equivalent to USD 105 a tonne in 2007-08.
According to the Mr PS Bhattacharyya chairman of CIL, BCCL has recently entered into agreement with SAIL in this regard. BCCL will supply approximately 1.67 million tonnes out of a total coking coal production of approximately 2 million tonnes to SAIL during this fiscal year.
He added that Rashtriya Ispat Nigam Ltd, which was the first to offer such a high price to BCCL, would be supplied the residual available quantity. Mr Bhattacharyya said that “The deal would ensure BCCL to remain in the black even after an INR 220 crore [2200 billion] negative impact on the bottom line due to interim relief granted in the ongoing National Coal Wage agreement.”
According to Mr Bhattacharya as per the existing pricing norm, BCCL could have demanded a far steeper price of USD 255 a tonne which is 15% less than the existing global price of USD 300 for its produce. He added that “However, SAIL was generous enough to not seek a price cut in 2007-08 as per the global price trends and paid at the same rate of 2006-07 to help BCCL remain in the black. Keeping that in view we have returned the gesture by offering a 40% cut on the world price in 2008-09.”
Source: Steel Guru
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