Indian private sector steel producers have claimed they will be disadvantaged in terms of their cost of production compared to government owned and operated steel mills if the Indian government goes ahead with allocation of coal mines to the latter on nomination basis, an official at India’s Ministry of Steel said on Thursday, November 5.
The ministry official stated that private sector steel mills, many of which have invested large sums in securing coal blocks at auctions, will have at least 20 percent higher cost of production than state-owned steel mills which will get preferential allotment of coal blocks without competitive bidding.
The federal government is in the process of allocating coal blocks to various metal companies controlled by the state such as National Aluminium Company Limited (Nalco) and Steel Authority of India Limited (SAIL).
Private sector steel mills have pointed out that state-owned steel mills will have access to lower cost coal supplies, while most private steel mills will either have to incur higher costs for coal from captive coal blocks secured through auctions or resort to high cost imported coal.