Somani Grp forms coal JV with Russian OAO

Somani Group on Sunday said it has set up a joint venture firm with Russian metals.

Diversified company Somani Group on Sunday said it has set up a joint venture firm with Russian metals to mining major Mechel OAO to cater to the growing demand of coal in the country.

The JV,Mechel Somani Carbon,will source coal from Mechel8217;s mines in Russia and other countries and process it in India to give just-in-time delivery as per the requirement,Somani Group8217;s President Atul Verma told PTI.

8220;The JV is for stockyard operations,where we intend to supply coal to needy industries in Orissa,Chhattisgarh,Jharkhand and Andhra Pradesh among others,8221; he said,adding that the new company will also invest over 100 crore to fund its expansion,including creation of infrastructure for the stockyard,to be built at Vizag.

8220;We would not like to commit any particular figure,8221; Verma said,when asked about the JV8217;s estimated coal supplies to Indian entities in a year.

He,however,added that the joint venture company will be importing 6 to 8 shipments of coal from Mechel8217;s mines,amounting to about 2,50,000 tonnes in a year.

8220;The idea is to have a stock of about 40,000 tonnes in the stockyard at a given time and this will be supplied to small and medium enterprises,who cannot import coal on their own due to high logistics cost. Our venture will be a just-in time delivery of coal for the orders received,8221; Verma said.

The coal reserves of 267 billion tonnes in India are the fourth-largest in the world after the US,Russia and China,although coal production at around 400 million tonnes,falls short of the demand by 10 per cent annually,he said.

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8220;With huge capacity additions in the sectors like steel,cement and power in the coming years,the demand-supply gap of coal is set to go up further,8221; he said,adding that the new venture will try to grab a significant market share in next 2-3 years.

The Somani Group President added that demand for coal in 2021-22 is projected at 1,353 million tonnes against the production assessment at 1,084 million tonnes,leaving a shortfall of 269 million tonnes.

When asked about the expansion plans of the new company,Verma said that depending upon the success of the new venture,the Somani Group-Mechel combine may also look for setting up similar stockyards at West Coast or at South-west coast of the country.

He added that new company will receive its first shipment in September.