Leading steel companies, including Steel Authority of India Limited (SAIL), Jindal Steel (JSW), Jindal Steel and Power Limited (JSPL), and RINL are in an advanced stage of talks to form a joint venture to buy coal assets abroad.

All these companies are likely to form a new company and then decide to bid for the coal blocks in various countries. That the talks were in progress was endorsed by the JSW Vice-Chairman and Managing Director, Sajjan Jindal, on the sidelines of a steel summit here on Wednesday, who said efforts would be made to seek good quality coal assets.

The development comes close on the heels of Adani Enterprises entering into an agreement with Linc Energy to acquire its Australian coal assets for about Rs. 12,600 crore in a cash-and-royalty deal.

Mr. Jindal said the companies would look at acquiring such assets in various mineral-rich countries such as Australia.

The proposal has also been endorsed by the SAIL chairman, C. S. Verma, who said if two to three leading players with common interest could pursue acquisition of assets abroad, it would be a good thing. It was SAIL which had floated the idea of combining the resources of all the industry players to create a ‘war chest' for ‘big ticket' buyouts of mines abroad and help in cutting the input cost of steel-making.

At present, there is a special purpose vehicle, ICVL, under the administrative control of the Steel Ministry, created for the purpose of acquiring coal assets abroad. International Coal Ventures Ltd is a consortium of top public sector firms SAIL, NTPC, RINL, Coal India and NMDC.

However, till date it had not had any success in acquiring coal assets abroad since its inception in 2008.

Private steel firms are scouting for such resources in countries like Australia, South Africa and Indonesia, among others, to reduce their dependence on expensive imports and cut their input costs.

High iron ore and coking coal prices have increased the input cost pressure on steel firms, leading to higher rates of the commodity in the domestic market.


More In: Companies | Business