The Steel Ministry has set up a committee to look into the need for rationalising the procedure followed by steel PSUs for procurement of coking coal, Parliament was informed today.
"A committee has recently been constituted in the ministry for looking into the need for rationalising the procurement procedure for coking coal, acquisition of mines abroad and optimising the use of coking coal by steel PSUs," Steel Minister Beni Prasad Verma said in the Rajya Sabha.
Replying to a question on whether the government was aware that during the last two years, SAIL and RINL have made purchases of coking coal at a time when the price was very high in international markets, he said this was a commercial decision of the companies.
"This [procurement] is done as per their requirements under a laid-down policy through long-term agreement (LTA). As per international market practice, quantities under LTA are settled annually by the empowered joint committee (EJC), which comprises representatives of both Steel Authority of India and Rashtriya Ispat Nigam.
"While negotiating quantities and prices with long-term suppliers, EJC takes the FOB (free-on-board) prices settled by Japanese steel mills and others as reported in the international journals as the benchmark," the minister said.
"The annual requirement is tied up at the beginning of the year and the same is confirmed and received quarter-wise throughout the year," he added.
Verma said prices of imported coking coal were up by 75% in FY11 vis-a-vis the previous fiscal, affecting the profit margins of steel-makers.