Kiwi firm to supply coking coal to Tata Steel

Solid Energy, New Zealand's largest producer, distributor and exporter of coal, will be supplying high quality coking coal to Tata Steel.

Solid Energy recently signed a three-year contract with Tata Steel for supplying high-grade coking coal. The move assumed significance in the wake of the crisis regarding availability of coking coal.

Also, coking coal prices had gone through the roof. Prices of coking coal, which were at $150 a tonne even six months back, were now hovering around $460 a tonne.

Tata Steel managing director B Muthuraman had told the media last month a host of measures that will be adopted by the company to overcome increasing input costs.

Among the measures announced was conversion contracts of coal and iron ore to coke, sponge and pig iron. Further, the company also planned to trade own raw materials for billets, slabs, pig iron, sponge iron with other steel plants.

Analysts tracking the company said while most of the companies were suffering owing to rising input costs, Tata Steel was shielded to some extent because it had captive resources.

Bulk of its requirements were met through the west Bokaro colliery, which not only met Tata Steel's requirements but, also supplied surplus coal to power plants and other steel plants.

Industry sources said, the colliery was one of the best in the country and it had managed to bring down its ash content. The high ash content in coal available in India had led companies to depend on imports. The west Bokaro colliery produced around 1.8 million tonne of coal.

The Jharia division produced steel grade prime coking coal and was capable of producing over 1.4 million tonne of raw coal from its underground mines.

Sources pointed out Tata Steel was also expanding capacities. The company had already announced that it would achieve 15 million tonne of crude steel production by 2010, out of which half of it would come up in Jamshedpur.

The balance would be spread over alternative locations in India and overseas.

Meanwhile, Solid Energy, which was expanding sales in Asia during this boom period for the coal industry, had also renewed its $120 million contract with Steel Authority of India Ltd for providing 1.5 million tonne coal over five years.