India’s ministry of coal has declined to reserve any specific volume of coal or coal blocks for domestic sponge iron producers, a ministry official said on Monday, October 5.
The official said that guidelines for the first-ever auction of coal supply linkages to various coal consuming industries was finalized last week by an inter-ministerial meeting and circulated among various stakeholders. This means that, in effect, Indian sponge iron producers will have to compete with other coal consuming industries like cement and fertilizers at the proposed auction of coal supply linkages.
The auctioning of coal supply linkages by the country’s largest coal supplier, Coal India Limited (CIL), does not have any provision for setting aside specific volumes of coal or blocks for the sponge iron industry as “there is no empirical evidence which will justify having sectoral reservation of coal for specific user industries,” the coal ministry official said, citing from the deliberations of the inter-ministerial committee meeting which finalized the coal supply auction linkages.
The Indian Sponge Iron Manufacturers’ Association had sought the setting aside of a certain volume of coal or a few coal blocks for the industry, claiming that a large number of small and medium-sized producers does not have the financial wherewithal to submit bids and compete with large coal consuming industries in securing their coal requirements through the auction route.
India has the largest sponge iron producing capacity in the world with an installed capacity of 46 million mt per year, while 90 percent of this capacity uses coal as its principal energy source.