Tuesday, February 8, 2011

SteelMin writes to CoalMin for changes in distribution policy

Arguing that pelletisation was a definite way to contain the rising exports of iron ore, the steel ministry has asked the coal ministry to expressly consider granting assured long-term coal linkages to pellet plants and help lower the input cost of pelletisation process by incorporating suitable changes in the National Coal Distribution Policy.

In a letter to coal secretary C Balakrishnan, a top steel ministry official pointed out that despite the known benefits of pelletisation, there were very few pellet plants in the country, most of which were for captive use. Identifying need for huge capital and non-availability of incentives as serious bottlenecks dissuading prospective developers of such plants, the ministry has made out a strong case for incentivising and providing them the much needed raw material security.

“There appears to be an inhibition for setting up pellet plants, due to lack of margins in production of pellets in comparison to that available from selling ore fines mainly in the export markets. The main reasons for this was the need for a huge capital and lack of incentives,” the steel ministry said in the letter.

It pointed out that most of the pellet plants currently use furnace oil as the fuel for induration process in their plants and through an assured supply of non-coking coal to the pellet developers, their production cost would come down by Rs 600-700 a tonne.

“The coal ministry is requested to include iron ore pellet making with the ambit of the said policy,” the steel ministry contended.

Source: SteelMin writes to CoalMin for changes in distribution policy

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