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Coal shortage forces India’s steel cos to pay more than normal cost: Report

According to VR Sharma, managing director at Jindal Steel & Power Ltd, mills are paying more than four times the normal costs for procuring coal from e-auctions and from mines. However, there has been no impact on production at most primary steel producers yet as they have adequate supplies and are unlikely to curtail output. To note that India relies on coal for about 70 percent of electricity generation, which is grappling with a shortage after a jump in demand, a squeeze on domestic mine output and surging prices of seaborne supply. Jayanta Roy, senior vice president, ICRA Ltd said that integrated secondary steel mills or stand alone sponge iron producers may have to face production cuts as they rely on non-coking coal to run operation and aluminum producers too are going to face a problem of availability and price of coal for their captive power plants and, depending on their supply tie-ups or contracts for international purchases, may have to face shortages as the government’s priority remains to the power sector. He further opined that with the end of the monsoon season and efforts of Coal India Ltd. to boost production, supplies should improve going forward.