Coal shortfall hits steel production in West Bengal

IANS, Oct 18, 2011, 02.48pm IST

KOLKATA: Production in the secondary steel sector of West Bengal has fallen as heavy rains have prevented the state-run Coal India Limited (CIL) from supplying enough of the vital raw material.

The sector expects to be further hit because there will be no e-auction of coal for it this month. It is on hold to divert the raw material to power stations. These auctions are a 'lifeline' to the secondary steel sector.

Coal supply to power and steel plants are badly affected as the coal giant was unable to meet its target in the first half of the current fiscal, the output falling short by around 20 million tonnes (MT) due to adverse weather conditions.

Against the target of 196 MT, largely due to heavy rains the Maharatna company could produce only about 176 MT of coal from April to September.

Steelmakers said the coal crisis for the steel sector will aggravate further with CIL's recent decision to offer four million tonnes of additional coal by e-auction to the power sector in October.

"Plants in West Bengal are on the verge of closing down due to acute coal shortage," Kolkata-based Shyam Steel director Lalit Beriwala told IANS. "We have been particularly facing severe shortage of coal for the last six months because of short supply from the CIL."

Beriwala said the state was currently producing at half its installed capacity.

"No new coal linkage has been given for the last four years in the state," he said.

He said prices of coal distributed through e-auction were very high; moreover, no trader should be allowed in the e-auction because they tend to jack up prices.

The coal distribution policy in the country has to be changed, he said.

On CIL's decision to put on hold the e-auction for the month of October, Beriwala said it will aggravate the coal crisis for steel producers as they purchased a bulk of coal through this medium.

"Now 70 percent of the steel plants will be closed down in West Bengal. I do not know what will be the fate of industry in the state if the government does not take any action," he added.

Another major steelmaker in the state, Jai Balaji Group, said it had resorted to more coal import from abroad.

"For the last few months, we have been facing severe shortage of domestic coal supplied by CIL and its subsidiaries," Jai Balaji Group chairman and managing director Aditya Jajodia said.

"Due to that our coal import has been increased by 25 percent. As a result cost of steel production has soared by about 40 percent," he added.

Jajodia said CIL's decision on e-auction of coal was a "negative development". "It will hurt steel sector as a whole," he added.

Santosh Bajaj of the Merchants' Chamber of Commerce ( MCC) said the steel sector in the state was facing supply as well as demand constraints.

"Bengal steel plants are facing a raw materials crisis, more in the recent times, because of the short supply in coal. Demand for steel is low because of low spending on infrastructure. If demand was high then the base price would have been higher. It would have ensured good profit for steel makers," Bajaj said.

Moreover, according to him, steel producers are also facing a working capital crisis as interest rates are too high.

"Financially they are in a pathetic condition," he added.

CIL, NMDC to join hands to set up coal-to-liquid plant

Priyadarshi Siddhanta

Posted online: Sat Jan 29 2011, 01:12 hrs

New Delhi : Arguing for hedging against extremely volatile global crude prices, two navratna mining giants, Coal India Limited and National Mineral Development Corporation have decided to form a consortium in setting up a Coal To Liquid (CTL) project at an estimated expenditure of nearly Rs 15,000 crore in West Bengal’s Birbhum district.

The move comes close on the heels of a recent visit by Coal Minister Sriprakash Jaiswal and CIL top brass to South Africa, where they saw the positive impact being created by the world’s oldest CTL plant being run by Sasol in the country’s Mpumalanga province. The liquid fuel generated have provided 27 per cent energy security to the African nation. “In a recent letter CIL Chairman Partha S Bhattacharya has offered to partner with NMDC to jointly execute a CTL project in the Deora-Pachami coal block in West Bengal’s Birbhum district,” Jaiswal told The Indian Express. The West Bengal government has sought a minority partnership in the proposed venture, he said.

Accordingly the CIL-NMDC consortium should be given the preferential allocation of the block which has an estimated reserve of 19 billion tonnes of coal, Bhattacharya said and reminded that the steel ministry too has made similar requests to the coal ministry in this connection. “The Sasol experience has clearly demonstrated the relevance of such a large CTL facility in enhancing energy security along with a hedge against extreme volatility of global oil prices. It would also lead to industrial rejuvenation of the eastern part of the country known for its industrial backwardness,” Bhattacharjee argued in his letter justifying the project.

NMDC to invest Rs. 1,000 cr. in Birbhum coal project

MINING TOGETHER: Ram Vilas Paswan (left), Union Minister of Chemicals, Fertilizer and Steel, and Buddhadeb Bhattacharjee, West Bengal Chief Minister, exchange documents after signing an MoU between NMDC and WBMDTC in Kolkata on Tuesday.

KOLKATA,19th November: Navratna public sector National Mineral Development Corporation (NMDC) will initially invest Rs. 1,000 crore to develop a coal mining project in Birbhum district in West Bengal, Chairman and Managing Director Rana Som said.

Mr. Som was here on the occasion of signing of Memorandum of Understanding (MoU) with the West Bengal Mineral Development and Trading Corporation (WBMDTC) for starting coal mining activities and supplying iron ore and bauxite.

He said the Deocha-Pachami coal block in West Bengal was one of the largest coal blocks in India and NMDC proposed to make its second foray in coal mining with this virgin block. The initial investment would go mainly towards land acquisition and purchase of heavy earth moving machinery. NMDC already had two coal blocks in Madhya Pradesh. The Birbhum block was yet to be allotted. He indicated that this mine would need technology and NMDC might rope in a foreign partner if it so wanted. Spread over a 9.7-sq. kilometre, the mine had a 2-billion tonne reserve of thermal coal and was deep mine. The West Bengal Power Development Corporation would have a 10-per cent stake in this venture, while the WBMDTC would hold 40 per cent of the equity with NMDC holding 50 per cent and having the right to divest 15 per cent to bring in another partner.

West Bengal Power Minister Mrinal Banerjee said that with a proposed capacity of 10,000 MW, the state utilities would need one lakh tonnes of coal a day soon. The project would help the power sector.

The MoU paves the way for the geological exploration of the deposit to establish the project’s commercial viability, after which the joint venture would be incorporated to carry forward the project. Union Minister for Chemicals, Fertilisers and Steel Ram Vilas Paswan, who was present while the MoU was signed, said the project will have an initial investment of Rs 1,000 crore. Other dignitaries present included Chief Minister Buddhadeb Bhattacharjee and Minister for Commerce and Industries Nirupam Sen.

The NDMC, India’s single largest iron ore producer, has also signed another agreement with the state government by which it will make a certain amount of iron ore available to the steel manufacturing sector of the state.

During the function, the chief minister thanked Paswan for his role in getting a number of the state’s projects cleared. “He has helped in the revival of IISCO factory at Burnpur with Central funding of Rs 13,000 crore. He is also getting Rs 5,500 crore for the Durgapur Steel factory and trying to clear the PCPIR project as early as possible. We are all thankful to him,” Bhattacharjee said.

According to Paswan, PCPIR project will receive the Central nod by this year. “The proposal will be placed in the high-powered committee comprising secretaries of different Union ministries. Then it will directly come to the Cabinet for clearance,” he added.

Chief Minister Buddhadeb Bhattacharjee said industrial progress was difficult without mineral supplies and a national policy was needed for dispersing resources evenly throughout the country.