In keeping with Steel Authority of India Limited (SAIL)’s strategy to form strategic alliances with related business companies, a memorandum of understanding (MOU) was signed today with Shipping Corporation of India Limited (SCI) to promote a Joint Venture Company (JVC) primarily to provide various shipping related services to SAIL for importing coking coal. The JVC may also participate in world wide dry bulk shipping trade.

The MOU was signed by Mr A K Jain, Executive Director (Corporate Planning)/ SAIL and Mr U C Grover, Director (Technical & Off-shore Services)/ SCI in the presence of Mr S K Roongta, Chairman/ SAIL and Mr S Hajara, Chairman/ SCI.

SAIL’s growth plan, which envisages its hot metal production capacity rising to over 26 million tonnes by the year 2010-11, will call for a quantum increase in demand for imported coking coal from present level of over 12 million tonnes (MT) to around 20 MT post Expansion. SAIL is ensuring backward integration as the JV would result in SAIL having securitization over part of the logistic chain which would also act as an effective tool for risk mitigation in the volatile shipping market. SAIL is planning to secure supply of various raw materials including limestone which is likely to be imported from Oman. SAIL imports coking coal primarily from Australia & USA. As coking coal prices have shot up by over 200 % to over $ 300 per tonne, higher freight is adding up to the total cost of steel making.

The JVC will own/operate/charter ships to offer competitive rates in shipping related business and set up economically feasible coastal transportation of coal from deep draft ports. SCI is the largest shipping company in India with a diversified fleet of 79 vessels including crude tankers, bulk carriers, etc and has considerable experience in owning and operating them. In addition to SAIL and SCI, the proposed JVC may also have other companies as partners.

Though currently SAIL’s exports is low, but this would increase post Expansion and in that, this venture will also be helpful. Currently SAIL exports steel to various countries including South East Asia & Europe.

Speaking on the occasion, Mr S.K.Roongta, Chairman/ SAIL said “SAIL is putting all efforts in containing its cost of production by various means and having this JV is one of the major step towards this.”

Mr S Hajara, Chairman/ SCI said, “There is enough scope for the JV to expand in the growing market’.”

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