Worried over domestic coking coal price hike effected by state-owned CIL, the country's largest steel maker SAIL today said it is in negotiations with the miner on the issue as it is difficult for the company to absorb the increase.
"We are under negotiations with them and working model will come out," Steel Authority of India Ltd (SAIL) Chairman P K Singh told PTI on Coal India Ltd's recent hike in coking coal prices.
CIL arm Bharat Coking Coal Ltd this month increased the prices of coking coal by about 20 per cent.
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Another subsidiary of the world's largest miner Central Coalfields Ltd has also increased price of metallurgical coal this month.
"We are in dialogue with them (CIL). We have told (them) that at this stage it is difficult for us to absorb (the hike in coking coal price). They have agreed to form a committee," Singh said.
The panel which will be constituted will have members from both the state-owned firms.
SAIL too is a state-owned firm and is a prime consumer of coking coal as well as a major customer of CIL's metallurgical coal.
"We have an MoU with Coal India. Once we are in that MoU, that pact remains applicable for the entire financial year. MoU means we also have an assured offtake from Coal India and We take coking coal from them. We take domestic coking coal supply only from Coal India," Singh said.
According to an official, the price of various grades of coking coal of CIL varies between Rs 2,400 and Rs 5,050 per tonne.
Asserting that SAIL was unable to recover its variable cost of production, he said there was a lot of pressure on its operations.
On possibility of price increase by the steel PSU, he said "it will depend on market situation". Of its total requirement, SAIL imports 86 per cent of metallurgical coal, while the rest is sourced indigenously.
The steel PSU has existing captive coking coal production of nearly 0.5 million tonnes per annum.
The global coking coal price, which was at USD 80 per tonne in January last year, rose to USD 283 per tonne in December, Indian Steel Association Secretary General Sanak Mishra said.
However, in early January, global price of metallurgical coal came down to USD 193 per tonne, Mishra said.
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