SAIL pins hopes on Tasra coking coal project

Still seen as a viable source, the Jharia coalfields would allow the steel major to lower import costs for a critical raw material. Public sector behemoth Steel Authority of India Ltd. is pinning its hopes on the Tasra project in the Jharia coalfields in Dhanbad, in its bid to secure supplies for raw material that it now has to import in a major way.

The country’s largest steel producer (hot metal output at 19 million tonnes in 2016-17) needs about 15.5 million tonnes of clean coking coal annually. More than 80% of its requirement is imported while the rest is met from indigenous sources. Imports rise in tandem with the poor quality and unavailability of indigenous coal. The requirement is set to increase to about 20 MTPA once SAIL gets into the 23 million tonnes per annum production stage post-expansion in 2020.

The domestic sources include mines of Coal India Ltd. and SAIL’s captive sources. It currently has three mines at Chasnalla, Jitpur and Ramnagar (non-coking coal). The raw coal output of these three Jharkhand mines was estimated at 7.6 lakh tonnes in 2016-17. It is in this context that the Tasra project assumes importance.

The proposal for developing this coking coal block of SAIL in the Jharia Coalfield, has been readied for placing before the company board.

Despite the fact that the cost of the project, originally conceived in 2009, has ballooned close to 10 times, it is still seen as viable and an important milestone in the steel major’s bid to secure raw material availability, with a 26-year life, sources said.

Tasra open cast mine is capable of yielding 3 lakh tonnes of prime coking coal in the development stage, in the first year of production (project expected to commence in the second quarter of 2017-18) and 40 lakh tonnes of coal by the fifth year, from which 20 lakh tonnes of coking coal can be produced after washing.

The project is to be developed by Lanco Infrastructure, a mine development operator (MDO) with which SAIL had signed an agreement in September 2013 for developing the project at a cost of ₹400 crore within two years.

Subsequent changes in land acquisition laws thwarted the project’s progress even as it led to a 10-times increase in its cost to the current ₹4,000 crore. The project now also includes a 300 MW power plant.

However, despite cost escalation, the PSU is convinced of the viability of this project. The investment would be made by the MDO and reimbursed by SAIL, which expects to commence Tasra by September.

The first year’s fund requirement has been pegged at ₹561 crore. “The investment would be on a staggered reimbursable basis,” a source connected with the project said.

Land acquisition may be seen as a hurdle to the project. Of the 900.6 hectares required for the project, 250 hectares are under private holding, while the rest lie with various government undertakings.

SAIL is not anticipating problems regarding land acquisition, sources said. This is so because government land is spread throughout the project area and the acquisition of private land is proposed to be done gradually and in small tranches.

No forest clearance is required for this project and some of the environmental consents have already been obtained.

In an internal communication, SAIL Chairman P.K. Singh said that there was need to develop new coal blocks quickly and start production.

He also said that low-quality, unwashed coal was affecting productivity and there was a need to upgrade washing facilities. It is in this context that development of Tasra attains criticality.

Source – thehindu