The Indian government will offer financial and non-financial support for state-owned steel companies to acquire coking coal assets overseas, an official from the Ministry of Steel said on Wednesday, August 22.
"Dependency on coking coal imports will continue to increase for the Indian steel industry. The government will therefore provide all support necessary for state-owned steel companies to establish raw material security by ensuring long-term supply sources," the official said.
"Financial support being considered will include raising funds from international financial institutions, lines of credit from domestic banks or sovereign guarantees, while non-financial support will be through leveraging the diplomatic network in the country of acquisition and government-to-government bilateral economic cooperation agreements," he added.
According to the ministry's forecast, the Indian steel industry will import 36.8 million mt of coking coal in 2012 to meet an estimated demand of 58.7 million mt, rising to 43.3 million mt in 2013 against demand for 65 million mt.
Steel Authority of India Limited (SAIL), the country's largest integrated steel plant owned by the government, has sought new coal blocks to ensure that 30 percent of its coking coal requirement comes from domestic mines. SAIL's current requirement of coking coal is 14 million mt, of which only 3.5 million mt is met from mines within the country. In 2011-12, the company imported 11 million mt of coking coal with an import value of $2.16 billion.
International Coal Ventures Limited (ICVL), a consortium of government-owned steel and mining companies led by SAIL, has bid for a 10 percent equity stake in a greenfield coking coal asset in Bowen Basin, Australia.
The company can only approve an asset acquisition of up to $270 million. If the value of the acquisition exceeds the formal limit, the government will fully support ICVL, the ministry officials said.