KOLKATA (miningweekly.com) - Indian major Coal India Limited (CIL) and Shipping Corporation of India (SCI) were expected to revive the joint venture (JV) shipping company mooted nearly three years ago, as coal imports were poised to gain momentum.

CIL and SCI concluded an agreement for an equal JV shipping company in 2010, but the venture stalled at the time, owing to issues around imported coal, a CIL official said.

However, the current mounting shortage of coal from domestic sources had made imported coal a long-term reality. Issues involving fuel supply agreements (FSAs) between coal suppliers and users were also cropping up, along with the option of direct imports by end-users.

Furthermore, CIL’s own import ambitions were also taking shape, necessitating plans for a total supply and logistics solution, which the company said made a shipping venture more viable.

The shipping venture had received a viability boost as a result of CIL’s aim of starting imports by March 2013, in order to meet the miner’s contracted obligations under the already established FSAs with thermal power generating companies, and more FSAs were scheduled over the next few months.

As per the Indian government directive under the FSAs, the coal miner would be obligated to supply a minimum of 80% of the contracted volumes from domestic mines and would be entitled to resort to imports to meet the balance of demand. Indications were that CIL would have to immediately start importing between six-million and seven-million tons of coal to meet the expected shortfalls under FSAs already in place.

Another development favouring the shipping JV has been the recent directive from the Indian government to all government-owned heavy manufacturing companies to use Indian shipping lines for their international trading activities.

Companies like CIL, Steel Authority of India Limited, and the country’s largest domestic power producer NTPC, would henceforth have to give preference to Indian flag carriers for inward and outward shipment of tonnages.

Officials said in 2010 at the time of the mooting of the proposal, that both SCI and CIL were keen to include NTPC as a third partner, since the power producer would be among the largest importers of coal for its thermal power plants.

However, in the wake of a new coal import regime emerging and possible changed sourcing plans of the power producer, fresh negotiations would have to be initiated with NTPC for its association in the shipping venture, the officials added.

NTPC’s total coal imports during 12-month period ending March this year were projected at 16-million tons, while total coal imports were forecast to exceed 100-million tons during the same period.