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Commercial coal mining will reduce India's dependence on imported fuel: JSPL MD
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Sanjeev Sharma | 11 Jul, 2020
The governments recent announcement to permit coal mining for commercial
sale marks a fundamental shift in the government policy to address the
continuing shortfall in domestic coal production to meet the countrys
requirements, Jindal Steel and Power Limited (JSPL) Managing Director
V.R Sharma said in an interview.
India has the world's
fourth largest coal reserve, the country imported 247.1 MT of coal in
2019-20. "The commercial coal mining will likely to reduce India's
dependence upon imported fuel," he added.
In keeping with JSPL's
stated objective of becoming debt-free in the next few years, JSPL has
divested its entire stake in its step down subsidiary, Jindal Shadeed
Iron and Steel Co LLC (JSIS Oman). The value of the enterprise deal is
estimated to be over $1 billion.
Sharma said, "This is in line
with our vision to deleverage our balance sheet and create a much
healthier balance sheet for our investors and stakeholders. Our
restructuring plan is proceeding as we had envisaged. JSPL is a firm
believer in the India growth story, and India's potential to become an
engine of global growth," he added.
JSPL MD said that even during
COVID 19, JSPL Indian operations recorded ever highest monthly steel
(including pig iron) production of 626,000 tons in June 2020. "Owing to
the Covid-19 lockdown, the domestic steel demand was subdued during the
last quarter; hence export evacuation supported the plant operations and
capacity utilization," he added.
He added that improved domestic
availability will reduce dependence upon imported thermal coal. Also,
India is dependent upon imported metallurgical coal, but the
Government's impetus on Coal Gasification will likely reduce the
dependency on imported metallurgical coal in the future.
What has been JSPL's performance in steel production and sales in the last quarter? Are exports powering steel Consumption?
Even during COVID 19, JSPL Indian operations recorded ever highest
monthly Steel (including. pig iron) production of 626,000 tons in June
2020 and ever highest quarterly steel (including pig iron) production of
1,670,000 tons in Q1 FY'21.
The company recorded a 12 per cent
growth (quarter-on-quarter) in sales volumes and an 8% rise (q-o-q) in
standalone steel production (including. pig iron) during Q1 FY'21.
JSPL
clocked ever highest standalone export sales of 900,000 tons in Q1
FY'21, the export sales contributed to 58 per cent of total sales
volumes in Q1 FY'21. JSPL's Consolidated Steel (incl. pig iron) Sales
rises by 7 per cent Q-o-Q.
Yes, owing to the Covid-19 lockdown,
the domestic steel demand was subdued during the last quarter; hence
export evacuation supported the plant operations and capacity
utilization.
What is the JSPL debt deleveraging strategy and target? What is the rationale for the divestment of the Oman asset?
In keeping with JSPL's stated objective of becoming debt-free in the
next few years, JSPL has divested its entire stake in its step down
subsidiary, Jindal Shadeed Iron and Steel Co LLC (JSIS Oman). The value
of the enterprise deal is estimated to be over $1 billion.
This
is in line with our vision to deleverage our balance sheet and create a
much healthier balance sheet for our investors and stakeholders. Our
restructuring plan is proceeding as we had envisaged.
JSPL is a
firm believer in the India growth story, and India's potential to become
an engine of global growth. We think we have an important role to play
in the evolution and growth of the Indian steel industry.
What is the JSPL view on import substitution and Atmanirbhar Bharat?
India is already Atmanirbhar as far as steel products for
infrastructure are concerned. JSPL is pioneered in technology and
development of products catering to the requirements of Oil & Gas,
Ship Building, Railways. Our peer group has the capacity and capability
to deliver special steel to cater to the requirements of the Auto
Sector.
On to raw materials, the Indian steel industry is to a
certain extent dependent upon imported raw materials like metallurgical
coal. In 2007, we decided to produce steel through Indian high ash coal
by converting it into syngas and commissioned the world's first
Syngas-based DRI plant in 2013 to make steel. Hence, we demonstrated the
capability of making steel by the usage of 100 per cent indigenous raw
material.
What is the strategy for the recently announced policy on commercial mining of coal blocks?
The government's recent announcement to permit coal mining for
commercial sale marks a fundamental shift in the government policy to
address the continuing shortfall in domestic coal production to meet the
country's requirements.
India has the world's 4th largest coal
reserve, the country imported 247.1 MT of coal in 2019-20. The
commercial coal mining will likely to reduce India's dependence upon
imported fuel.
What is the capacity of the coal gasification project?
JSPL operates the world's first coal gasification based DRI Plant of
2.0 million tonne capacity at Angul where syngas is used to make
direct-reduced iron (DRI) or sponge iron, an input required in the
steel-making process.
JSPL's coal gasification plant capacity is
225,000 NM3 per hour of syngas, which is supporting the 2.0 Million MT
of syngas based DRI plant.
How much coal is JSPL buying currently? How can coal imports be reduced?
JSPL currently has a requirement of around 5.5 Million MT per year of
Metallurgical Coal and 7 Million MT of Thermal coal requirements.
Improved
domestic availability will reduce dependence upon imported thermal
coal. Also, India is dependent upon imported metallurgical coal, but the
Government's impetus on Coal Gasification will likely reduce the
dependency on imported metallurgical coal in the future.
What is the outlook on demand for steel as the economy opens up?
The government is pushing for infrastructure-led growth, and investing
heavily in its development. The railways' sector has been the one bright
spot in the last few years, in terms of growth and steel use, mainly
driven by its capital expenditures in modernization projects and record
production of rolling stocks.
The machinery and yellow goods
sector demand will likely to become healthy with the advent of the
increased mining operation. Governments have already auctioned a sizable
number of iron ore mines, and upcoming commercial mining of coal will
further add to the demand for yellow goods and other steel products from
these segments.
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