Coal price trouble cement firms, India

Coal price trouble cement firms, India
Published: 13 July 2010

A section of cement manufacturers has asked the government to bring parity in coal prices.

Some of the older players enjoy the advantage of assured coal linkage from Coal India Limited (CIL), while about 55 per cent buy it through the e-auction route.

CIL offers coal at Rs 800/t  under assured linkage, while others pay Rs1500/t in e-auctions.

The industry had proposed that CIL should distribute its cheap coal among all players on a pro rata basis according to their production.

Alternatively, CIL should do away with the linkage system altogether.

“Everyone should pay the same price for coal as it contributes nearly 55 per cent of the cost. There should be a level-playing field,” said the owner of a mid-sized cement company who did not wish to be identified.

According to industry estimates, cement producers use around 45Mt of coal every year. Of this, around 1Mt is the assured supply from CIL.

It could be difficult for CIL to scrap the old contracts as the recipients of the assured supply could challenge the move in court.