Experts welcome CIL proposal for e-auction of coking coal

Coking coal users and experts have welcomed the Coal India (CIL) plan to sell indigenous coking coal through forward e-auction, like other commodities sold on various commodity exchanges. The proposed step is beneficial for both the CIL and end users, they said.

“Forward e-auction process will ensure guaranteed supply of coking coal to the consumers while it will also enrich the balance sheet of CIL. It is a win-win situation for both (the suppliers and consumers),” said Ganesh Natarajan, chief executive officer (CEO),Ennore Coke, a West Bengal-based coke manufacturer.

The CIL has proposed to sell coking coal through e-auction in a recent interaction meeting and review of New Coal Distribution Policy, held on June 6 and organized by Union Ministry of Coal.

“Entire coking coal be offered through forward e-auction,” was one of the suggestions made by CIL in the meeting, according to the recorded note of the meeting.

CIL sells about 2 million tonne coking coal annually at notified price, which does not ensure guaranteed supply. Though coking coal supplied from abroad is about 14 times higher than the annual sales of CIL, Indian consumers eye the locally produced coke, which is cheaper and easily accessible.

“Imported coking coal prices can cost nearly Rs 10,000 per tonne, while coke supplied by CIL through notified price starts from Rs 6,000 per tonne. So, even if the prices may go up because of e-auction, it may not go up beyond international prices,” said Sandeep Jain, coal analyst with Karvy Comtrade.

Indian coking coal contain higher amount of ash, which makes it inferior from low-ash contained Australian coke. Therefore, any price escalation of Indian coke would automatically compel consumers to go for imported coke, explained Jain.

However, as the bidding price for e-auction will be influenced by global prices, it may push prices of end products such as steel, cement and fertilizers, he said.