PSU steel major, Steel Authority of India Ltd (SAIL), is set to more than double the capacity of its Benga coking coal mines in Mozambique, targeting nearly 4.5 million tonnes per annum (mtpa). This move is part of SAIL's strategy to increase its coking coal supply, a vital component in steel production, and reduce dependency on volatile international prices.

The expansion is expected to involve an investment of $150-200 million over the next three to four years, according to sources familiar with the plan. Currently, SAIL relies on a mix of imported coking coal, including supplies from Russia, and domestic sources such as Coal India.

Global tenders for mine development in Mozambique have been issued by International Coal Ventures Ltd (ICVL), a joint venture that includes NMDC, RINL, Coal India, NTPC, and SAIL, with SAIL holding a 47% stake.

In FY24, Benga produced around 1.24 mt, and the current capacity is approximately 2 mtpa. According to SAIL Chairman Amarendu Prakash, production at Benga is expected to double in the next few years, with most of the output intended for SAIL's own use.

Tender documents outline plans to extract around 375,000 tonnes of coal per month, which would bring production to the projected 4.5 mt. SAIL is also seeking shareholder approval for a long-term supply agreement with Minas de Benga Limitada (MBL), the foreign joint venture responsible for the Benga mine. The deal, estimated at Rs 60 billion through FY26, will ensure a steady supply of premium hard coking coal for SAIL.

In addition to Benga, ICVL holds two other greenfield mines, Zambeze and Tete East, in Mozambique.

On another front, SAIL has expressed interest in participating in the government's Critical Mineral Mission, which aims to secure the supply of key minerals such as lithium, cobalt, and copper. While SAIL has traditionally focused on minerals for steel production, the company is open to exploring opportunities in the critical minerals space as the mission develops.

(business line)