KOLKATA (miningweekly.com) - India’s Steel and Coal Ministries were in a tussle over the current structure of Bharat Coking Coal Limited (BCCL) as a wholly owned subsidiary of Coal India Limited (CIL) and the country’s largest and sole coking coal producer.

The Steel Ministry has proposed that BCCL be demerged from its parent CIL and the company’s unexploited coking coal assets auctioned off to Indian steel companies for captive use of coking coal.

The Coal Ministry was prompt in raising objections to the proposal, questioning the technological expertise of steel producers in operating mines, particularly underground mines.

The Coal Ministry also cited the trend among steel producers of resorting to importing coking coal, and pointed out a reluctance to invest in constructing coal washeries within the country.

The Steel Ministry proposal for the demerger of BCCL and the auctioning off of idle coal assets formed part of the draft 2012 National Steel Policy, which cited the move as part of measures to mitigate a shortage of domestic coking coal faced by steel producers.

CIL and the Coal Ministry have jointly taken up the fight on behalf of BCCL, maintaining that any move to restructure the subsidiary would seriously jeopardise the company’s plans to increase coking coal production from 30-million tons a year to 40-million tons a year by 2017, and to 50-million tons a year by 2020.

BCCL has disputed the Steel Ministry’s contention that coking assets were lying idle for no good reason, claiming that there was no economic rationale in keeping coking coal assets idle if it made economic sense to operationalize such assets.

Currently, the predominantly coking coal miner operates 81 coal mines, including 40 underground, 18 opencast and 23 mixed mines in some of the most geologically difficult reserves in the country around the coal belt of Dhanbad in eastern India.

According to the Coal Ministry, CIL was providing the financial and technological muscle to strengthen BCCL, including conversion of $467-million in BCCL liabilities into preferential shares, which was approved by the CIL board late last month.

BCCL, a 'sick' company as per the Sick Industries Companies Act of 1985, had been referred to the Board for Industrial and Financial Reconstruction, but had come out of review earlier this year after posting a positive net worth.

Current domestic demand for coking coal was estimated at between 60- and 65-million tons a year, half of which was being met through imports. Coking coal sourced from Australia accounted for 84.88% of the imports into India followed by 10.36% from Indonesia and 3.45% from New Zealand.