Russian firms urge Indian steel firms to invest in Russian coal companies to improve efficiencies

Indian companies should purchase stake in Russian coal companies operating in its far east region in order to bring down the coal price and improve their port capacity to handle large ships, said a senior official of Russia-based Far East Investment and Export Agency (FEIEA).

Currently, Indian steel and energy companies such as Steel Authority of India Limited (SAIL), Tata Steel, JSW, Adani Group, and Jindal Steel and Power Limited (JSPL) have shown interest in importing total nine million tonnes of coal annually from the Russian firms operating in the far east region.

However, Indian companies have raised issues related to high price of coal, lack of port capacity to handle big ships, etc.

Executives of the Indian companies met senior Russian officials such as Nikolay Kudashev, Russian ambassador to India, and Leonid Petukhov, CEO, Far East Investment and Export Agency (FEIEA) last week in the presence of Union Petroleum and Steel Minister Dharmendra Pradhan.

After the meeting, when asked if the issues related to high coal prices in far east region of Russia were discussed during the meeting with Indian companies, Petukhov told reporters, “Yes, this issue was raised…Whatever the prices are, they are big always for the buyer, and small always for the seller. Given the turbulence, I think the high prices are bad for steel makers and good for the coal producers.”

“For me, the only way on how to basically stabilise it is to get the equity, to get the share. The steel company, through whatever facility, (should) buy equity stake in the producer of the Russian coal,” he said. Most of the coking coal companies operating in far east region of Russia are publicly listed companies. Most of the Russian coal producers have ports …In order to bring the costs down, you need to invest money in the ports. In September this year, Prime Minister Narendra Modi announced that USD one billion line-of-credit for the development of Russian far east region.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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