In a letter to TKA Nair, principal secretary in the PMO, Tata Steel managing director B Muthuraman said the government must encourage public-private partnerships (PPPs) in operating virgin coking coal mines which are an exclusive domain of CIL and its subsidiaries at present.

Observing that Bharat Coking Coal Limited and the Eastern Coalfields Limited (both CIL subsidiaries) are not running profitably, he said, “…infusion of a strategic private partner (an existing steel producer) could help in turning around many of these loss-making operations.”

According to Muthuraman, domestic steel companies have charted out mega capacity expansion plans to quadruple the current output to 180-200 million tonne (MT) by 2020. “The existing demand-supply imbalance in the coking coal sector worldwide has led to unprecedented hikes in prices and also restricted availability. The supply situation of indigenous coking coal in India is quite grim with production stagnating for the last several years,” he noted.

To meet the demand for coking coal, steel makers import about 22 million tonne. “The situation is only going to worsen in the next four-five years with imports likely to double to 40-45 million tonne,” Muthuraman said.

He called for greater participation by the steel industry in the mining of coking coal through PPPs between CIL and the steel producers. Recently, CIL issued expressions of interest (EoIs) for joint ventures to re-open 18 closed underground mines in the eastern part of the country. “This is a move in the right direction, and we are hopeful that this would help release locked coal through the PPP mode,” he said. Interestingly, Muthuramam sought exclusive rights for the domestic industry in such PPPs.

When contacted, coal secretary H C Gupta said it was a welcome idea. “There is no harm in the private sector seeking partnership with CIL to exploit coal reserves,” he told The Indian Express. In fact, the steel ministry too has pitched in for allowing SAIL to mine coking coal jointly with CIL.

According to official estimates, India will require 120-130 million tonne of coking coal imports to reach a steel capacity of 150 million tonne per annum by 2020. The demand for this input is set to spiral as steel companies prepare to step up production to about 80 million tonne per annum by 2012.

Domestic production of prime grade coking coal was just 10-12 million tonne till 2006-07 forcing high reliance on imports to feed the growing domestic demand. Of the total proven coal reserves in India, 13 per cent comprises coking coal and the remaining 87 per cent is non-coking coal.

•Tata Steel managing director B Muthuraman says the government must encourage public-private partnerships in operating virgin coking coal mines which are an exclusive domain of CIL and its subsidiaries at present

• He said infusion of a strategic private partner (an existing steel producer) could help in turning around many of these loss-making operations

• Bharat Coking Coal Limited and the Eastern Coalfields Limited (both CIL subsidiaries) are not running profitably