A joint venture agreement between Steel Authority of India Ltd., and the Shipping Corporation of India was signed this week for the transportation of coking coal between Australia and India.
The Shipping Corporation of India (SCI), country’s largest shipping company signed 50:50 joint venture agreement with Steel Authority of India Ltd (SAIL), the largest integrated irons and steel producer in India on 29th March, 2010 in New Delhi.
Working in synergy both public sector companies are expected to benefit greatly from this venture for which a company will be formed in due course and will be based in Kolkata. It will enable SAIL to have control over part of its coking coal supply chain and effectively mitigate the risks existing in the volatile shipping market. SCI which is on a fast track expansion course and expected to double its shipping tonnage in the next three years is expected to bring its expertise in the shipping arena to the JVC.
“With regards the investment to be made, we have decided not to divulge any details until the formation of the company,” stated Umesh C. Grover SCI Director (Technical & Off-shore Services) who signed the agreement with SAIL Director (Finance) Soiles Bhattacharya. “However, broadly speaking the major investment will involve the cost of two Panamax ships which will be deployed for transporting coking coal from Australia to India. The volume of this cargo annually will be 1.2 million tonnes for the first year and this quantum will be reviewed from time to time thereafter.”
According to a spokesman of SAIL the company at present annually imports around 10 million tonnes coking coal, a major input for steel making. The requirement of imported coking coal would increase with the company planning to double its hot metal production capacity in the coming years from the current level of around 14 million tonnes. SCI is already in the process of acquiring new vessels.
“This is the sixth joint venture company that has been set up by SCI,” stated Mr. Grover. “The first was Irano Hind Shipping Company signed in 1975 in which SCI holds 49 per cent stake while the remaining 51 per cent equity is held by the Islamic Republic of Iran Shipping Line. Later, we formed three joint ventures for LNG transport all for a period of 25 years. Another has been the SCI Forbes Ltd., a joint venture between SCI and M/s. Forbes & Company Ltd. (formerly known as M/s. Forbes Gokak Ltd.) which is part of the Shapoorji Pallonji Group which has aturnover of over US $ 1.5 Billion.
SAIL Chairman S. K. Roongta informed that SAIL is keenly focused on ensuring its long-term raw material security and would continue to give thrust on logistics facilities and creation of infrastructure for smooth flow of raw materials and movement of finished products.