more good news for thermal coal miners......

Thermal coal to help cut cost: SAIL official
http://www.financialexpress.com/news/thermal-coal-to-help-cut-cost-sail-official/775353/0
Indronil Roychowdhury
Posted: Wednesday, Apr 13, 2011 at 0359 hrs IST

Ranchi: The Steel Authority of India's (SAIL) joint venture with Japan's Kobe Steel and Korea's Posco to make steel with thermal coal will help it save on costs dramatically.

With coking coal prices skyrocketing and India having to import its requirement, it will be a "revolutionary step" if SAIL manages to pull it off, says DD Mukherjee, executive director, SAIL's R&D Centre for Iron and Steel. Both Posco's Finex technology and Kobe Steel's ITmK3 technology are based on producing steel using thermal coal. "We are working with both the technologies in our R& D centre to enable the Indian coal grades fit the technologies. If it becomes successful both the steel plants in JV with Japan's Kobe Steel and Korea's Posco will be non- coking coal or thermal coal steel plants," he added.

While coking coal prices, according to a SAIL official, has been on a steep rise with contract prices for the quarter April to June expected to be around $280-290 per tonne, the best grades of Indian thermal coal after a 150% price increase has touched R4000 per tonne or a little above $90 per tonne. This price is close to import parity (landed cost) prices. So even if SAIL has to import thermal coal it can save at least $ 200 in terms of per tonne of coal consumption.

Mukherjee said if coking coal is replaced by thermal coal, the two new plants would depart from the conventional blast furnace route and would use "smelting reactors or smelting reduction process."

SAIL has targeted increasing its capacity from present 13.5 million tonne to 21.4 million tonne through various greenfield projects, which also includes the JVs. While the JV project with Kobe steel is supposed to come up at Durgapur, the JV with Posco is supposed to come up at Bokaro.

The non-coking coal route would help SAIL save huge cost and bring about increased efficiency in steel production. For every million tonne of hot metal (liquid iron and steel) production at present, SAIL requires 500-525 kg of coke leading to around 14 mt consumption of coking coal per annum. This would go up to around 28 mt if the company continues with the conventional coke usage via the blast furnace route.

Besides, availability of coking coal has started shrinking with China banning exports and this has made the global coking coal market extremely volatile, a major concern for steel makers. Mukherjee said Posco is already using Finex technology in its steel unit at Korea but ITmK3 is still to be implemented. SAIL, according to chairman CS Verma, will give a major thrust on R&D and will come out with a master plan for it by August this year.

Expenditure on R&D would go up by three-four fold, Mukherjee added.