Ennore Coke, BHP, Anglo Coal in pact soon

Encouraged by the softening prices of coking coal in the international market, Ennore Coke Limited, a domestic manufacturer of metallurgical coke is close to securing its annual long-term contract of coking coal beginning April 1 this year with its international suppliers.

The company has targeted to import about four lakh tonnes of coking coal, mainly from Australia in 2009-10 out of which 50 per cent would be semi-soft coking coal and the remaining 50 per cent being premium hard coking coal.

“Ennore Coke is very close to secure its annual long-term coking coal contract with its international suppliers like BHP Billiton and Anglo Coal of Australia and we expect to clinch the deal within a day or two. The company would import semi-soft coking coal in the range of $115-120 a tonne and premium hard coking coal at about $128 a tonne which is in tune with the prevailing international prices”, Ganesan Natarajan, president and chief executive officer, Ennore Coke told Business Standard.

In the international market, Nippon Steel Corporation and JFE Steel Corporation of Japan are reported to have clinched the annual coking coal contract beginning April 1 this year with BHP Billiton recently for hard coking coal at about $130 a tonne which is about 60 per cent less than the price paid by Asian steel makers in 2007-08.

The average price of coking coal in the international market jumped from $96 a tonne in 2007 to around $300 in 2008. Steel makers were now seeking lower prices of coking coal owing to falling steel prices and slump in the demand for raw materials like coking coal in the wake of the prevailing economic recession.

Australia-based Macquarie Group Limited, a global provider of banking, financial and advisory services has forecasted a benchmark price of coking coal at $110 per tonne for 2009. Ennore Coke expected a further fall in average price of coking coal in the global markets to reach about $100 within 3-4 months.

At present, the coking coal requirement of Ennore Coke stands at 7,20,000 tonnes per annum. The company has reserves of about 0.4 million tonnes of low ash coking coal imported from USA and it needs around 30,000 tonnes of coking coal per month to meet its requirement for 2009-10.

The company’s coking coal requirement was set to go up in the next couple of years as it planned to set up a one million tonne per annum coke plant at the upcoming Dhamara port in Orissa at an investment of about Rs 1,400 crore. The plant which is expected to be operational by the end of 2010 would have a coking coal requirement of 1.3 million tonnes per annum. At present, the company runs a 1.5 lakh tonne per annum coke plant at Haldia (West Bengal) and it aimed to scale up capacity of this plant to three lakh tonnes per annum.