Friday, Jun 3, 2011, 1:09 IST
By Promit Mukherjee
By Promit Mukherjee
Mumbai ; JSW Steel, one of India’s largest steelmakers, sees a ray of hope for saving its Rohne coking coal block in Jharkhand, which has become off-limits for the company after the government designated it as falling under ‘no-go’ area for environmental reasons.
The company said there is a policy provision under which ‘no-go’ tag can be lifted from the strategic reserves that are scarce in the country.
Sajjan Jindal, vice chairman and managing director, JSW Group, recently told DNA Money that coking coal is scarce in India, is an important feedstock and a strategic reserve for the steel industry.
“While the Rohne block is not cleared yet, we understand that there is a sort of policy which allows strategic reserves to be used to the optimum, so we expect it to be cleared soon,” he said.
Sheshagiri Rao, chief financial officer of JSW Group, said, “While we are hoping an early resolution to the problem and have given representations to the government, we have already initiated land acquisition in Jharkhand,” said.
The company plans to build a 10 million tonne per annum (mtpa) plant in Jharkhand which is expected to be operational by 2020. It had been allotted an iron ore and a coking coal mine in the state with reserves of 250 mt and 460 mt, respectively.
It also has plans to build a 900 mw captive power plant and a 6 mtpa cement plant in the state. The total proposed area for the plant is 6,500 acres, which is currently being acquired.
Though the company’s current priority is its first 10 mtpa greenfield project in West Bengal, the Rohne coking coal block holds a lot of significance for JSW as it currently has zero backward integration in coking coal, which increases its input costs and affects its margins.
The block was allotted to a consortium of JSW Steel, Bhushan Power and Jai Balaji Group in 2007.
An analyst with an international brokerage said, there is a provision that the company might get a tapering licence under which a company is assured supply of coal in case it has done some substantial work in the mines. “So, for Rohne block too this can be a way out but at what price it will get the coal under such a licence is again uncertain,” the analyst said.
According to the data available with the coal ministry, besides a few companies which enjoy backward integration in coking coal, India has to import almost all its coking coal requirement. The country’s current reserves of coking coal stand at 33,413 mt against a massive thermal coal reserves of 267 billion tonnes.
In 2009-10, Indian companies, especially steel and cement, consumed a total of 40 mt of coking coal, out of which 16 mt was produced indigenously and the remaining had to be imported.
Last year the Union environmental ministry had classified 203 coal blocks, including both coking and thermal coal, as falling under ‘no-go’ zone, which is almost 48% of the total coal mining area available in the country, and had put 350,000 hectares under the area where environmental clearance could be given. But due to lobbying by the coal ministry and corporates, the number of blocks under the ‘no-go’ zone was reduced to 126, or approximately 10% increase in the mining area.
However, after insistence by the coal ministry some of the blocks were freed from the ‘no-go’ zone but it was not very well received by the steel and power industries, which have been demanding further relaxation. (sourced DNA)
The company said there is a policy provision under which ‘no-go’ tag can be lifted from the strategic reserves that are scarce in the country.
Sajjan Jindal, vice chairman and managing director, JSW Group, recently told DNA Money that coking coal is scarce in India, is an important feedstock and a strategic reserve for the steel industry.
“While the Rohne block is not cleared yet, we understand that there is a sort of policy which allows strategic reserves to be used to the optimum, so we expect it to be cleared soon,” he said.
Sheshagiri Rao, chief financial officer of JSW Group, said, “While we are hoping an early resolution to the problem and have given representations to the government, we have already initiated land acquisition in Jharkhand,” said.
The company plans to build a 10 million tonne per annum (mtpa) plant in Jharkhand which is expected to be operational by 2020. It had been allotted an iron ore and a coking coal mine in the state with reserves of 250 mt and 460 mt, respectively.
It also has plans to build a 900 mw captive power plant and a 6 mtpa cement plant in the state. The total proposed area for the plant is 6,500 acres, which is currently being acquired.
Though the company’s current priority is its first 10 mtpa greenfield project in West Bengal, the Rohne coking coal block holds a lot of significance for JSW as it currently has zero backward integration in coking coal, which increases its input costs and affects its margins.
The block was allotted to a consortium of JSW Steel, Bhushan Power and Jai Balaji Group in 2007.
An analyst with an international brokerage said, there is a provision that the company might get a tapering licence under which a company is assured supply of coal in case it has done some substantial work in the mines. “So, for Rohne block too this can be a way out but at what price it will get the coal under such a licence is again uncertain,” the analyst said.
According to the data available with the coal ministry, besides a few companies which enjoy backward integration in coking coal, India has to import almost all its coking coal requirement. The country’s current reserves of coking coal stand at 33,413 mt against a massive thermal coal reserves of 267 billion tonnes.
In 2009-10, Indian companies, especially steel and cement, consumed a total of 40 mt of coking coal, out of which 16 mt was produced indigenously and the remaining had to be imported.
Last year the Union environmental ministry had classified 203 coal blocks, including both coking and thermal coal, as falling under ‘no-go’ zone, which is almost 48% of the total coal mining area available in the country, and had put 350,000 hectares under the area where environmental clearance could be given. But due to lobbying by the coal ministry and corporates, the number of blocks under the ‘no-go’ zone was reduced to 126, or approximately 10% increase in the mining area.
However, after insistence by the coal ministry some of the blocks were freed from the ‘no-go’ zone but it was not very well received by the steel and power industries, which have been demanding further relaxation. (sourced DNA)
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