In a letter to steel ministry, coal ministry has reportedly denied grant of special status to the proposed Ultra Mega Steel Plants (UMSPs) for priority allocation of coal linkages.
Indian steel firms meet upto 70 percent of their demand for coking coal, used as a raw material in steel-making, through imports. The steel industry consumed 43 mn t coking coal last fiscal.
By 2017, reports suggest that demand from steel plants may nearly double to 90 mn t. To make matters worse, the draft UMSP policy does not provide for allocation of captive coal mines for these large sized steel plants.
The ministry is said to have denied coal linkage because of the ongoing coal shortage in the country. The rejection could severely dent the governmentÂ’s plan to set up the large-sized plants with 10,000 mn t capacity each to boost steel production and avoid costly imports.
In 2011-12, the country produced 532 million tonne (mn t) coal, falling short of the demand by 90 mn t which had to be met through imports. Coal imports are expected to go up to 200 mn t by 2017.
The fresh blow from the coal ministry comes as a double whammy for the steel ministry as resource-rich states have already protested setting up UMSPs calling them “resource guzzlers”.
It is learnt that mineral-rich states — including Orissa, Jharkhand, Chhatisgarh and Karnataka – have refused to commit resources like land and coal for such plants.
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