Africa is becoming a favourite destination for domestic iron and steel companies such as JSW Steel, Tata Steel, Steel Authority of India Limited, and Ispat.
These companies are eyeing rich coal deposits of -- South Africa, Nigeria and Mozambique -- for securing hard coking coal to run their plants. They have been traditionally looking at Australia for coal imports. Non-steel player such as Aditya Birla Minerals too are eyeing coal fields in Africa.
For producing an annual steel output of 40 MT, 28 MT of hard coking coal is required. "Companies are looking towards importing more than 20 MT of coking coal requirement from overseas," said an official in a leading steel company. The annual steel production is growing at 7 per cent.
Central Coal Fields and Bharat Coking Coal Limited together produce 5-6 million tonne of coking coal in the country. Sail Steel, the largest steel maker has annually produces 10 MT of steel followed by Tisco (5 MT), JSW (3.8 MT), Essar (3.5 MT) and Ispat (more than 3 MT).
JSW Steel recently has signed a Memorandum of Understanding with a Mozambican party for conducting feasibility study on some of the country's coal mines. Based on the study, the company has the option to obtain license and begin operations on these mines.
"Africa is rich in hard coking coal, which is essential in steel manufacturing. We will be bidding for more blocks in future," M V S Sheshagiri Rao, director, finance, JSW Steel, said.
Tata Steel, which has plans of raising its steel capacity to 15 million tonne by 2010 from the current 4 MT will need 11 MT of coal. According to industry sources, the company is looking at sourcing 7 MT of coal from regions such as Africa and Australia. SAIL, after its stint of imports from Australia, is headed towards Africa for coal imports.
SAIL's monthly coal requirement will be 1.5 million tonne. More than 50 per cent of this requirement is met through imports.
Ispat, through its holding company, Global Steel Holding, has bid for mines in Nigeria.
Of the coal reserves of 221 BT in the country, coking coal reserves form 31 BT, hard coking coal reserves are only 5.31 BT.
