SAIL, too, pulls out of race for Aussie mine

After Coal India Ltd (CIL), the Steel Authority of India Ltd (SAIL) too has withdrawn from the race to acquire 25 per cent stake in Tamhoor coal mines in Australia. Tamhoor is a subsidiary of Sydney-based coal mining company Austral Coal.

CIL first decided to pull out because it discovered that SAIL had also bid for the same company. CIL had planned to sell the coking coal imported to SAIL.

An official source said SAIL decided on not bidding for the company because it had already entered into an alliance with BHP Billiton.

The strategic alliance involved SAIL investing in Billiton's coal mines as well as sourcing coal from it through long-term supply arrangements.

"Our requirement for coking coal would be adequately met through the alliance hence we decided against participating in the bid," a SAIL source said.

CIL is now trying to acquire other coal blocks in Australia and is in touch with coal companies there. SAIL's decision to stay away from the race, if conveyed early to CIL, would have allowed the later to remain in the race and possibly acquire a stake in the company.

SAIL's decision puts CIL back to square one "" it has to once again begin looking for other avenues of importing coking coal from Australia.

Shashi Kumar, chairman of CIL, had earlier told Business Standard that "it made no sense to separately bid because we would have imported coking coal and supplied it to SAIL."

SAIL would be requiring increased volumes of hard coking coal as well as iron ore to meet its plan of raising hot metal production from the current level of 13 million tonnes to about 20 million tonnes by 2011-12.

The strategic alliance with Billiton is part of SAIL's effort to not only secure long-term supplies of high quality coking coal but also reinforce its own strengths in the area of iron ore mining.

Steel authority and BHPB have agreed to jointly finalise the investment plans relating to development of new iron ore mines in India as well as overseas coking coal mines.

Before finalising mining and project plans, both the companies would undertake detailed studies, including due diligence, review of the assets, and feasibility studies.