i Develop Stocks Advisory

SAIL in a spot as Coal India arm seeks 40% price hike At a time when international prices of coking coal are poised to surge 200%, Steel Authority of India Ltd (SAIL) is at the receiving end of a second whammy. Bharat Coking Coal Ltd (BCCL), a Coal India subsidiary, is not willing to renew its supply agreement unless the steel producer agrees to an upward price revision. A K Pal, chairman and managing director, BCCL, said the mining company would insist on a 40% price hike for any new supply contract with SAIL. Like in the case of iron ore mining company NMDC Ltd, BCCL, as the sole supplier of coking coal to domestic users, wants to benchmark prices for supplies to Indian steel producers to international coking coal prices. Pal said the current international price of coking coal was around $335 (about Rs 13,400) per tonne. As per the last contract, BCCL was supplying coking coal to SAIL at Rs 4,500 per tonne. “We have entered into a similar agreement with Rashtriya Ispat Nigam Ltd (RINL) and Durgapur Projects Ltd (DPL) for supply of coal at Rs 6,300 per tonne. Any new contract with SAIL will have to match these price levels,” Pal said. The annual contract between SAIL and BCCL expired on March 31. It was for supply of 18 lakh tones of coking coal per annum. According to Pal, in case the contract with SAIL is not renewed, the surplus will be supplied to RINL and DPL. As per the initial agreement with RINL valid for two months, BCCL will supply 20,000 tonnes of coking coal. “However, RINL is pressing us for additional supply,” he said. Pal said that in 2007-08, BCCL’s total production stood at 35 lakh tones. The company expects to improve the production figure to around 43 lakh tones during 2008-09.