Russian mining and metal major, Mechel, entered into a three year coal supply agreement with Japanese JFE Steel Corporation on 3 Sept’15.
This is the first time when Mechel has signed a long term coal supply contract with a Japanese company. According to the agreement, Mechel will annually supply upto 1 MnT of metallurgical coal to the JFE Steel Corporation. Coking coal for the supply will be mostly produced by Mechel’s subsidiary, Yakutugol Holding Company OAO, and its own production at the Elga coal deposit, which is one of the largest high quality coking coal fields in the world.
The pricing mechanism will be determined by market conditions. Validity of the agreement is upto August 2018.
The deal is not likely to impact the Indian market as it will not lower export availability in Russia. Moreover, Russian origin coal is only a small portion in the entire mix of Indian coal imports. Coking coal imports from Russia into India were recorded at 0.24 MnT during both FY15 and FY14, according to SteelMint statistics. And, only 70,000 MT of Russian coking coal has been imported into India upto Aug’15 during the current fiscal, statistics show.
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