Here’s why govt may link price of coking coal to imported dry fuel

The government on Tuesday said that for higher supply of coking coal in the country and to ensure that it is provided at a cheaper rate, it is considering measures like linking the price of domestic coking coal to the imported dry fuel.

The development assumes significance in the wake of an inter-ministerial panel suggesting formulating an import parity-based pricing mechanism for domestic coking coal factoring the quality parameters.

“For higher supply of coking coal in the country and to ensure it is provided at a cheaper rate, the decision to yet reduce ash percentage with upgraded technology and the price of coking coal to be linked to imported coal are the measures under consideration,” the coal ministry said in a statement.

The committee, headed by the coal additional secretary, has also suggested the identification of additional coking coal blocks for production by Coal India Ltd (CIL) and the private sector and auction of CBM overlap coking coal blocks.

Recently, the formed inter-ministerial committee, including industry stakeholders, to strategise augmentation of coking coal production in India has submitted its recommendations, the ministry said in the statement.

Based on this, the coal ministry has set up the mission coking coal to evolve a road map for increasing production and utilisation of domestic coking coal.

The main recommendations of the committee include having an incentive-based framework to encourage the steel sector for utilisation of stamp charging technology and invest in R&D initiatives for redesigning blast furnaces for utilisation of domestic coking coal.

The panel also recommended that CIL should publish mine-wise/seam-wise details of coking properties of coal on its website and purchaser may be allowed to choose from a specific source.

The committee also suggested that tax incentives may be provided to the entities for manufacturing of underground mining machinery and entities engaged in underground mining and allocation of coking coal linkages by CIL to private washeries, setting up of coking coal washeries on an aggregator model basis.

The main recommendations include: Adopting existing advanced technology for the beneficiation of coking coal, developing a policy framework for disposal of washery rejects and middlings may be reviewed and made more elaborate”, the statement said.

With the proposed measures and policy initiatives, coking coal has the potential to emerge as one of the important new business areas for CIL and other private sector players, which will contribute in multiple ways to the economic development of the country.

The vision for setting up mission coking coal is to prepare an action plan to reduce import of coking coal which includes exploration, enhanced production, adoption of new technologies, allocation of coking coal blocks for private sector development, setting up of new coking coal washeries, enhanced R&D activities and improvement of quality parameters.

This will give the necessary boost to coking coal production in our country and strengthen in-house capabilities which thereby will help in substantial reduction of coking coal imports and will lead us on a path to Atmanirbhar Bharat.

The coking coal and steel sector have a high correlation with each other. Coking coal is mainly used in the manufacturing of steel through the blast furnace route. Domestic coking coal is high ash coal and is not suitable for direct use in the blast furnace.

Therefore, coking coal is washed to reduce the ash percentage and is blended with imported coking coal before utilisation in the blast furnace.

About 50 million tonnes (MT) coking coal is imported by the country on an annual basis and the value of coking coal imported in 2020-21 was Rs 45,435 crore. Thus, augmenting the supply of domestic coking coal would not only help in reducing the coking coal imports but also help in saving the forex and fortifying our foreign exchange reserves.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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