Steel Authority told to expedite coal mine buys abroad

The government has asked public sector steel companies Steel Authority of India (SAIL) and Rashtriya Ispat Nigam (RINL) to intensify efforts to acquire coal mines in Australia and Canada, before the shortage of coking coal could jeopardise their capacity expansion plans.

"We have asked these PSUs to intensify their efforts to acquire coal properties overseas either through insurance security of supplies or acquire controlling stake in the mines," a top Steel Ministry official told PTI.

He said, following the recent tour of Steel Minister Ram Vilas Paswan to Australia, SAIL and RINL have gained confidence to acquire mines abroad and have formed their respective teams of handpicked officers to carry out negotiations.

Currently, SAIL and RINL are part of a special purpose vehicle (SPV) along with Coal India (CIL) to acquire coal properties abroad. The steel ministry has asked the companies to go on their own.

SAIL is executing modernisation programmes at all its plants at an expenditure of over Rs 45,000 crore. Once this gets over, the expanded capacities would require nearly double the amount of coal they are consuming now, he said.

The situation is particularly alarming as almost all modernisation programmes are likely to be over by 2010, following which the new capacities would go on stream.

"SAIL has a corpus of around Rs 1,000 crore to acquire mines while RINL has around Rs 500 crore to do so," the official said and pointed out that the money was adequate to meet their purpose.

The capacity expansion of IISCO Steel Plant is expected to be over by February 2010, while that of Salem Steel Plant by March, the same year. Similarly, expansion of the Bokaro Steel Plant would be over by August 2010 and that of the Bhilai Steel Plant by September same year, he said.

"These PSUs have been asked to complete their modernisation programmes on time as a year's delay will result in a loss of Rs 5,000 crore," the official said.

The SPV between SAIL, RINL and CIL would jointly have authorised capital of Rs 10,000 crore and a paid-up equity of Rs 3,500 crore. SAIL and CIL would have to chip in with Rs 1,000 crore each.

Earlier Coal India had mooted Coal Videsh on the lines of ONGC Videsh (OVL), but the Finance Ministry had shot down the proposal saying it was not viable.

CIL even constituted a team of senior officials for the purpose, who had toured certain nations in Africa and given their suggestions, but they did not fructify as the venture never took off.