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Tata boss offers a $4 billion carrot to state's coal sector

Business

India’s Tata Steel said it was willing to underwrite coal developments in Queensland to spark a resurgence in investment and development it needs for its booming steel industry.

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Tata managing director TV Narendran expressed concern and frustration at the lack of spark in the industry and said he was concerned that there was little investment emerging in Queensland to meet the massive demand India has for coking coal.

He said the lack of investment was caused by an inability for the industry to distinguish in the public’s mind the difference between thermal and coking coal.

Thermal coal was used in electricity production and was losing the battle with renewables because of climate change concerns whereas coking coal was for steel and there was not as yet a viable alternative.

“We have some concerns that there is ambivalence there because there is a concern about the future of coal and we are separating out thermal coal from coking coal. We are talking about coking coal which we believe has a much brighter future and there is a need for investment to happen,” he said.

“One thing I hear from industry is that there is a bit of concern about the increase in royalties, which obviously has come up and that it will eat into profits and hence investments.

“The second concern is the questioning of the future of coal and not distinguishing between thermal coal and coking coal.

“Given coal is such an important part of the economy in Queensland I think there is an opportunity for industry and government to work together.”

He said he came to Australia three years ago and spoke about issues relating to logistics which were disrupting supply, but this time it was a lack of investment.

“This time it’s less about that (logistics), but my concern is that we expect steel demand in India to double in the next 10 years so are there investments being planned to support that? I don’t see that,” he said.

“We are not looking at investments in Australia, but we are happy to underwrite capacity and get into arrangements with suppliers willing to increase capacity,” he said.

“The company bought about $4 billion a year in coal from Australia and there was an expectation that it would double over the next decade.”

“I think it’s not about anything specific that the Government has said. It’s more about the fact that even when I came here three years ago before the pandemic there were a lot of issues relating to logistics and we explained there was a need for some of these issues to be ironed out.

“Then at that point I said if Australia was not seen as a stable reliable supplier, then Indian suppliers would be forced to go to places like Russia. This was three years back.”

Narendran said the transition away from using coal in the steel process to hydrogen was happening much faster in Europe than it was in India and there would be a demand for Queensland coal for decades to come.

 

 

 

 

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