Financial Times : India pushes to turn miners into global players

Industry News 2010-05-20 08:43:37

 

Source: Financial Times, London

Published on: May 20, 2010

Author : James Lamont

 

Go forth and acquire” is the message India’s government is spreading among the country’s steelmakers and mining companies. It seeks a rapid internationalization of India’s mining companies in the interests of supply security to protect its fast growing economy.

What lies behind the latest clarion call is coking coal. Sourced from Australia and a key element of steel production, its price has risen steeply in recent months. India’s Ministry of Steel now believes the supply constraints surroundings this raw material are symptomatic of what might happen to other commodities. The immediate answer is anew Mining Policy ill to address the risks of a shortage of coking coal.

Virbhadra Singh, the steel minister, worries that India’s mining industry is asleep at the wheel when it comes to the global commodities market.

“[Indian companies] woke up later to the harsh reality that supply of coking coal could take such a dimension. It is time for the Indian steel and mining companies, whether in the public or private sector, to look for opportunities overseas more seriously,” he told an industry forum this week.

India hasn’t been a slouch in commodity acquisitions. Most have been in oil or soft commodities like tea, sugar and agricultural land rather than minerals.

Indian companies are, however, never short of ambition. The Steel Authority of India, the country’s largest steel producer, has declared it is looking for coking coal assets in Australia and the US. It was also considering opportunities in Mozambique, South Africa and Indonesia. 

In a short term, the government has pulled a protectionist lever. Alongside the appeal to global expansion, the government is tightening its hold on domestic sources of iron ore to feed local mills. It has already increased export duty on lump ore by 15 per cent and is now considering “definitive deterrence” measures to prevent export from the world’s fourth largest producer of iron ore.

It will increase the capacity in the public sector, which will be almost double (of present),”he said.

Singh said that the government is concerned about the Arcelor Mittal and Posco projects, which have been stuck for over five years now. “The Prime Minister (Manmohan Singh) has shown his personal keenness,” he said, adding that his ministry has taken up the issue with the state governments concerned.

 

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