PTI reports that Bharat Coking Coal Limited has introduced more industry-friendly terms for its coking coal linkage auctions. This development comes as part of a broader strategy by Coal India Limited to reduce the country's reliance on imported coking coal, a crucial raw material for steel manufacturing. The modifications have garnered positive feedback from major steel producers, who are now more inclined to participate in future auction rounds.
Coking coal is an essential component in the steel-making process, primarily used to produce coke, which is vital for smelting iron ore. Historically, India has relied heavily on imports to meet its coking coal demand, leading to significant foreign exchange outflows. The government and coal industry stakeholders recognize the need to shift towards domestic sources to enhance self-sufficiency and reduce import bills.
BCCL's recent long-term linkage e-auction in tranche VII marked a notable success, with a total of 3.36 million metric tons of coking coal offered. Out of this, an impressive 2.40 million metric tons were successfully booked, setting a new record for coal bookings in the sector. This achievement stands in stark contrast to previous auctions, particularly tranche VI, where no coal was booked, indicating a renewed interest and confidence among bidders.
Steel manufacturers have expressed satisfaction with the changes made to the auction terms. Goutam Senapati, AVP (Coal) at JSW Steel, emphasized that the simplification of terms has made the bidding process more accessible. He noted, “With the necessary relaxations and changes, it made it conducive for us to bid.” In tranche VII, JSW Steel secured 2.06 million metric tons of coking coal and indicated a strong interest in participating in upcoming auctions.
However, Senapati also pointed out that further relaxations are needed to address remaining industry concerns, which could enhance participation rates in future bidding processes aimed at replacing imported coal.
While the revised auction terms have been well-received, steel producers stress the importance of quality, quantity, and timely delivery of coking coal. Rajeev Datta, DGM (Coal Coordination) at Tata Steel, acknowledged the attractiveness of the new auction norms but highlighted the necessity for BCCL to ensure coal quality and reliable supply. “Coal India and the government have listened to us and made the auctions more attractive. If more coal from new mines is brought in, it will generate further interest from steel companies,” he stated.
BCCL aims to ramp up its washed coal production from approximately 1.5 million metric tons in FY24 to 2.5 million metric tons in the subsequent financial year. This increase is projected to save around $562 million in foreign exchange by substituting imported coal with domestic output. Samiran Dutta, Chairman and Managing Director of BCCL, emphasized the importance of this initiative in enhancing the company’s operational efficiency and contributing to the national economy.
To further its objectives, BCCL is also looking to accelerate its asset monetization efforts. The company plans to seek bids for the development of four coal washeries, which will have a combined capacity of approximately 8 million metric tons. This initiative is expected to enhance coal processing capabilities and improve the quality of domestic coking coal.
A senior official from Coal India highlighted that several key relaxations have been introduced concerning the end-use of coal middlings, a byproduct of the coal washing process. These middlings consist of a mixture of clean coal and coal gangue, and their effective utilization can significantly enhance the efficiency of coal production.
Additionally, the new auction documents have relaxed the timeframe for incremental linkage and inter-company coal transfers within the same corporate group, facilitating smoother operations for steel producers.
The primary objective of these coking coal auctions is to generate premium revenues for Coal India while simultaneously meeting the government’s target of reducing coking coal imports. By promoting domestic production, the government aims to strengthen the country’s steel sector and enhance its global competitiveness.
