Steel Authority of India Limited has agreed for a threefold increase in prices of imported coking coal from Australia, a move that is likely to increase the input cost and put pressure on its bottom line.
This comes on top of PSU assuring the government to hold the price line for three months till the first week of August at a time when international prices have firmed up.
"In view of the soaring international prices, which have almost trebled, SAIL has settled its annual contract with Australian miners at about USD 300 per tonne (FOB) of coking coal from July 1," a source said.
Previously, the steel major used to procure Australian coking coal for about USD 98 a tonne. In 2007-08, it imported about 10 mn tons of coking coal and procured 4 million tons from domestic market.
SAIL Chairman S K Roongta had earlier said that the company may have to import 12 mn tons of coking coal this year as its total requirement would increase to about 15.7 mn tons.
In a bid to help SAIL reduce its heavy dependence on coking coal imports, the Steel Ministry had recently sought the Coal Ministry's intervention in expediting the proposed strategic partnership between SAIL and BCCL for developing the Kapuria coal block in Jharkhand.
In view of its expansion plans and to reduce costly coking coal imports, SAIL has been into regular talks with Coal India's subsidiary Bharat Coking Coal Limited (BCCL) for floating a joint venture to develop the Kapuria coal block, which has an estimated reserves of about 150 mn tons.
Source: Economic Times
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