CIL to become explosives maker to break cartel

The economy’s largest consumer of explosives, Coal India Ltd (CIL), in a tie-up with Indian Oil Corporation, is set to itself become a producer and parts-supplier to ease its procurement need.

“We are lining up a two-way strategy. One, we are in the process of acquiring Indian Oil Corporation’s explosives division. And, we would be supplying ammonium nitrate, an explosive raw material, to producers who can do it (make explosives) for us,” said S Narsing Rao, chairman and managing director.

The state-run coal producer buys about Rs 1,500 crore of explosives annually. Early this year, the Competition Commission of India had imposed a fine on nine companies for forming a cartel to supply explosives for CIL.

“IBP (earlier Indo-Burma Petroleum) had an explosives division. When we acquired the company in 2007, this division also came to us. Since it is not our core business, we are keen to tie up with someone and are close to roping in CIL,” said a senior IOC official. According to sources, the IOC explosives division would be formed into a separate company in which both parties have equal stake.

As for ammonium nitrate, CIL has already signed a memorandum of understanding with Fertilizer Corporation of India, GAIL India and Rashtriya Chemicals and Fertilizers for revival of the Talcher urea factory in Odisha. The unit’s revival plan for Rs 8,000 crore is to produce 1.2 million tonnes of urea and ammonium nitrate yearly. CIL is set to supply about five mt of coal a year for this project. The supply of ammonium nitrate became an issue after a ban on bulk import since April. India imported 342,265 tonnes of raw ammonium nitrate in 2011-12 and about 350,000 tonnes in 2012-13.