Tata Metaliks may bid for foreign coal blocks
Business Standard — April 12, 2006

Tata Metaliks is toying with the idea of jointly bidding for coal blocks outside India with associate company, Hooghly Met Coke & Power Company, a joint venture between Tata Steel and West Bengal Industrial Development Corporation (WBIDC). Harsh K Jha, managing director, Tata Metaliks, said, "We are thinking whether we can bid together for coal blocks outside India. "However, no discussions had been initiated with Hooghly Met Coke, as yet. Jha explained that five years back Tata Metaliks capacity was at 1.3 lakh tonne and today it stood at 6.5 lakh and the key factor in driving profitability of the company was raw material.

Hence the pig iron manufacturer was putting extra effort on backward linkages like iron ore and coal. Tata Metaliks had already applied for iron ore in the western parts of the country. For coal blocks the company had applied in Jharkhand in 2004. Jha said, the company was awaiting the mineral policy. The policy would deal with the clause advocated by some of the state governments that mines would only be allocated to companies setting up plants in those states. However, Tata Metaliks had also eyes set on coal blocks outside India.

Jha said, Hooghly Met Coke would require around 1.6 million tonne of coking coal, once it was fully operational. "Taking both Tata Metaliks and Hooghly Met Coke, the total coking coal requirement will be to the tune of around two million tonne," he said. Hooghly Met Coke plans to start commercial operations early 2007. The Rs 1,000 crore project would manufacture superior grade metallurgical coke primarily for use in blast furnaces of Tata Steel and would consider sale both in the domestic and international markets.

Jha explained that tying up raw material needs had become crucial in the wake of rising costs. According to reports, iron ore prices in the new year were likely to increase 10-15 per cent. Coke prices over the last six weeks had increased 10 percent. Jha said, the impact on Tata Metaliks cost was to the tune of Rs 1,200-1,500 per tonne. This also made a case for increase in pig iron prices. Prices had increased over the last six weeks by Rs 700-800 per tonne in the domestic market.

Jha said, the company could review prices again. He said,pig iron prices had been on a downward trend over the last 10 months and could move in a reverse direction now. Currently, domestic prices were at par with international prices.