Solid Energy, a former export award winner, has signed a recent deal to sell SAIL (Steel Authority of India Ltd) up to 1.5 million metric tonnes of hard coking coal over the next five years. This is worth in excess of $120 million.

As part of Solid Energy’s market expansion strategies in India it also secured a new contract with Tata Steel, a subsidiary of India’s largest private company, to supply 300,000 tonnes of coal, valued at $24 million over three years.

India has become a key market for Solid Energy and SAIL would be happy to take more of its coal, says Malcolm Roberts, Solid Energy’s marketing manager.

“We regard India as a long-term market and are a small but unique and high quality supplier to it. We hope to increase the volumes we sell into India and, at this stage, we are looking for new mines so we can do so. Though there is still plenty of coal at Stockton there is a limit to amount we can transport through the rail network to Lyttelton and this is currently a constraint.”

Coal from the Stockton Opencast Mine, just north of Westport, is particularly good quality in that it ignites quickly and is low in ash by-products. India has a large natural resource of coal but it’s high in ash by-products and low to ignite. The two coals, when mixed together, complement each other providing a perfect mix to fire India’s burgeoning steel industry.

Stockton’s coal is transported by train to Lyttleton, shipped from Lyttleton to Paradep Port on the north-west coast of India then SAIL takes it by train to its many steel mills. A ship with 45,000 metric tonnes of coal leaves Lyttleton, for India, every two months.

Malcolm Roberts says that orchestrating the deal was not an easy task and it could not have done it without support from and New Zealand Trade and Enterprise (NZTE) and Ministry of Foreign Affairs and Trade (MFAT).

Roberts explains that, “There were technical difficulties with the high sulphur content of our coal but we worked closely and intensely with SAIL engineers on their materials controls to overcome this issue.”

“Solid Energy was particularly fortunate in having the ongoing help of Ravi Ravindran, NZTE’s trade development manager, who well understands the Indian steel industry and knows many of the players in it, Caroline McDonald, the New Zealand High Commissioner in Delhi whose regular visits to, and contact with, the Indian Ministry of Steel was immensely useful in keeping the impetus of official communications going and, last but not least, the Honourable Jim Sutton, the Minister for Trade Negotiations, whose visit to Mr Tripathy the Indian Minister of State for Steel, in February, smoothed the way for the deal.”

The SAIL and Tata contracts represent 20% of Solid Energy’s diversified export programme. Solid Energy also exports coal to China, Japan, South Africa and Australia.