By Dipankar De Sarkar, IANS
London : A clutch of public sector giants led by Steel Minister Ram Vilas Paswan are in London sniffing out opportunities to invest into mines producing a kind of coal needed to manufacture steel and develop Indian infrastructure.
A high-level delegation of a dozen public sector leaders and senior government officials have held a series of meetings with global merchant bankers in London over the last week and told them of India’s interest in investing in coking coal – a key ingredient in steel.
Coking coal is produced when a kind of soft and very dark ‘bituminous coal’ is fired without oxygen, and its absence in India has prompted a ‘coking coal security strategy’ that the minister says is every bit as important as India’s energy security.
“The price of steel is rising all over the world, and our steps to cut duties and tariffs have not worked. At the same time we want to increase our steel production in order to develop India’s infrastructure as our economy booms. This is the problem,” Paswan said Monday.
On paper, India is the world’s fifth largest producer of steel, but production is 53 million tonnes compared to China’s nearly 490 million tonnes.
The government’s target is to increase production to 124 million tonnes by 2011 and to 200 million tonnes by 2020 in order to plug a growing gap between supply and demand, but access to coking coal is key to the success of this strategy.
The main producers of coking coal are Australia, Canada, China, Mongolia, Mozambique, South Africa and the United States – countries where the India government will now look to increase investments as a result of the meetings last week with 16 merchant bankers.
India imports 26 million tonnes of coking coal and demand is projected to increase to 35 million tonnes by 2010 and 47 million tonnes by 2012.
Paswan’s delegation, comprising the CEOs of the public sector giants SAIL, RINL and NMDC, which are now grouped into a single entity called Coal Venture International Ltd (CVIL), with an initial equity of Rs.350 billion ($8.75 billion).
“It’s not a lot of money to play around with but at least we have made a start,” said a member of the delegation.
“The idea behind it is similar to the one that informed ONGC Videsh Ltd. Essentially, we are going prospecting abroad,” he added.
The main objective of the CVIL is to secure coal assets abroad by buying equity into existing mines.
“Identification and tying up of global coal resources has assumed utmost significance in the present scenario,” said Paswan, who also holds the chemicals and fertilisers portfolio.
“At present steel production in India is growing at six percent annually, while consumption is growing at 12 percent – hence the pressing need to augment steel production capacities in India,” the minister added.