Recent coking coal price rise puts pressure on SAIL's operations

New Delhi: India's largest steel maker SAIL today said there is a need to develop indigenous sources of coking coal to meet its requirements as recent rise in the price of metallurgical coal was putting pressure on its operations.

While addressing his employees for the first time through company's Facebook and Twitter account, SAIL Chairman P K Singh said that the steel maker currently meet the maximum requirement of coking coal through imports.

"The recent hike in coking coal prices, is putting pressure on our operations," he said. "Given the unprecedented volatility in international markets, we need to develop indigenous sources of coal to meet our requirements.

Also, there has to be wise use of this input material with attaining efficient pushing coefficient," he added. Coking coal, also known as metallurgical coal, is used to create coke, one of the key irreplaceable inputs for the production of steel.

"While we augment our volumes, we are likewise planning to raise our mining capacities to sustain the growth. At the same time, greater emphasis on beneficiation and alternate routes of steel production will have to be explored for being able to use these low grade raw materials which are available in abundance," he said.

Extending new year wishes to his employees, Singh said, "Last year, while I interacted with you on this occasion as Chairman, it was barely a few weeks since I took over. Our company had several challenges to overcome during that period.

Our inventory levels were high, production was sub-optimal and modernized units were not producing to the required levels," he said. "I had expressed confidence that with the dedicated efforts of the 85,000 ignited minds in SAIL, we could overcome any challenges, howsoever daunting they were," he added.

During the year 2016, SAIL has made improvement in its market share by 12.7 per cent, reduced its unit cost of production, became EBIDTA positive for two consecutive quarters from April to September 2016 and increased production from new and modernised units, among others, he said.

While the company's celebrates its achievements, many more challenges still persist.

"As we aim to enhance our saleable steel capacity to 20 million tonnes, the market competition too will escalate simultaneously.

Other producers are also increasing their capacities. We also have to be ready to face global threats as the domestic steel industry cannot be insulated from global trends where demand-supply imbalance will take a long time to readjust," he said.

"We aim to produce around 15 million tonnes in the current financial year and 17 million tonnes in the next financial year. Our preparedness for the same has to be there for the same," he added.

"In current dynamic market scenario, there is intense competition, the cost of production is escalating, resources are shrinking, and holding on to customers is becoming more challenging," he said.

Stressing that the companies need to relook at their business models, he said that the key to sustain and grow in this rapidly changing business environment is to "concentrate on 3 Rs   Reconstruct the business model, Reinvent the strategies and Remodel the marketing approach in our company."