SAIL, SCI tie up for shipping JV
Steel Authority of India (SAIL) on Monday signed a memorandum of understanding with Shipping Corporation of India (SCI) to promote a joint venture company for providing various shipping-related services to SAIL to import coking coal.
By ET Bureau |
NEW DELHI: Steel Authority of India (SAIL) on Monday signed a memorandum of understanding with Shipping Corporation of India (SCI) to promote a joint venture company for providing various shipping-related services to SAIL to import coking coal.
The JV may also participate in world-wide dry bulk shipping trade. The MoU was signed by AK Jain, SAIL���s executive director of corporate planning and UC Grover, SCI���s director of technical & off-shore services in the presence of SAIL chairman SK Roongta and SCI chairman S Hajara.
SAIL���s growth plan, which envisages its hot metal production capacity rising to over 26 million tonnes by 2010-11, will call for a quantum increase in demand for imported coking coal from the present level of over 12 million tonnes (MT) to around 20 MT post expansion.
SAIL is ensuring backward integration as the JV would result in SAIL having securitisation over part of the logistic chain, which would also act as an effective tool for risk mitigation in the volatile shipping market. SAIL plans to secure supply of various raw materials including limestone which is likely to be imported from Oman.
SAIL imports coking coal primarily from Australia & the US. As coking coal prices have shot up by over 200% to over $ 300 per tonne, higher freight is adding to the total cost of steel making.
The JV will own/operate/charter ships to offer competitive rates in shipping-related business and set up economically-feasible coastal transportation of coal from deep draft ports. SCI is the largest shipping company in India with a diversified fleet of 79 vessels including crude tankers, bulk carriers, etc and has considerable experience in owning and operating them.
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In addition to SAIL and SCI, the proposed JV may also have other companies as partners. Though SAIL���s exports are low currently, this would increase post expansion and in that, this venture will also be helpful. SAIL exports steel to various countries including South East Asia & Europe.Start a SIP with as low as ₹500 with ET Money App!
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