Jindals keen to acquire coal assets overseas with PSUs

With the much-hyped International Coal Ventures Limited (ICVL) a Special Purpose Vehicle floated by leading mineral and metal PSUs....

With the much-hyped International Coal Ventures Limited (ICVL) a Special Purpose Vehicle floated by leading mineral and metal PSUs failing to make much headway in acquiring overseas coal assets,steel PSUs such as SAIL and RINL have initiated in talks with Jindals-promoted JSW and JSPL to buy such properties abroad through a Public Public-Private Partnership (PPP) initiative.

With neighbouring China stealing the march over India in acquisition of coal assets globally,the Indian steel companies are keen to go full throttle by jointly executing deals. With coking coal prices shooting through the roof,the input costs of the utilities have soared.

At a summit on the steel industry’s unfinished agenda,Steel Authority of India Limited (SAIL) Chairman C S Verma pointed out that the Japanese steel mills negotiate the coke prices together which put them in an advantageous position. Indian steel producers too should hands to negotiate coke prices like Japanese producers, he argued. The Indian utilities were currently importing 20 million tonnes of coking coal and when the production reaches 120 MT by 2012,they would have to import 90 MT more. Coke prices were hovering around 200 dollars a tonne in April-May.

Indicating that such an exercise was on,JSW Steel Vice Chairman and Managing Director Sajjan Jindal said his firm was already in talks with maharatna SAIL and navratna Rashtriya Ispat Nigam Limited (RINL) for floating a JV to scout and acquire global coal assets. This has put the spotlight once again on ICVL,floated jointly by National Mineral Development Corporation,Coal India Limited,NTPC along with SAIL and RINL,for its failure to execute any acquisition. ICVL has failed to take off despite being armed with a Rs 10,000-crore war chest and enjoying the powers of a navratna company.

ICVL has failed to win its recent bid for the Stanwell mine in Australias Queensland province,which Steel Ministry’s insiders attribute to lack of risk-taking ability by the PSUs. Moreover the needs of the constituents were divergent. While CIL and NTPC needed thermal coal properties,SAIL,RINL and NMDC would prefer coking coal properties to feed their hungry furnaces. This mismatch of demand was the key factor behind the poor performance of ICVL,ministry officials argue. The proposed Public-Private Partnership model could help in circumventing the regulatory hurdles encountered by the PSUs in acquiring such assets.