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Mr. Pulak Baran Chakrabarty, CEO, Shyam Mineral Resources

14 Jul 2015

‘We will offer professional coal mining services’

Shyam Minerals Resources Pvt Ltd is a subsidiary of `1500 crore Shyam Steel Group. SMRPL was born, when Shyam Steel acquired the mining lease of Ardhagram Coal Block for captive use at the plant of Sova Ispat Limited in 2010. Now when the company has lost the Coal Block in the recent scrapping of blocks by the government, SMRPL plans to spread its wings and provide mining services at par with international standards. In the process, it has added more qualified Mining Engineers to its team. Pulak Baran Chakrabarty, CEO, Shyam Mineral Resources spoke to InfralinePlus on the probable challenges in mining sector and the way ahead. Excerpts...

With scrapping of coal, the industry is facing tough time. Shyam Minerals Resources Pvt Ltd had interest in many areas, but after the coal block at Ardhagram lost, what are your plans. Will you now stick to steel making itself?

Well, we do not want to confine the operations of our company and have planned to go for metal and coal both. We are looking forward to have our own coal and metal mine and for this we are not limiting ourselves to India, but we are exploring options to have Chromite and gold mines outside the country as well. Though for the coal mine, preferably we want the mine to be in West Bengal as we have the plant in the eastern state of India. We have lost the block when the government scrapped coal mines across the country, but we will bid for coal mine in the next round of coal mine auctions.

What exactly do you plan to do now. In which direction, will the company head towards?

We are very strong in operations and running mine operations is our core strength. We want to build on it and we are working on a plan to form a group, which will professionally run coal mines for other companies also both for PSUs and other private companies. We are in the process of tying up with an Australian equipment manufacturing company and will get necessary equipment and support to run the coal mines from that company. We will announce the deal shortly.

And for mine safety and having all possible safety measures for the workers who work in the mine, we are in discussions with an international group. The group will advise us on safety parameters that should be taken for the safety of workers, equipments and the mine. All these steps are in the direction to make the group a one-stop-solution for mining operations.. be it for mining, safety of operating the mine professionally. We have got skilled human resources within the company.

It is also in the process of joining hands with one of the world’s leading mining machinery group to enable one window access of mine operators to global mining technology.

But post government scrapping coal blocks there are many challenges ahead of the industry. How easy of difficult would it be for the industry to overcome those challenges?

No doubt it is a challenging time for the industry. With scrapping of coal blocks en masse, the gap between supply and demand has widened so much so that many power generating companies have decided to shut their plants as it was not feasible to run the plant at a time when the fuel was not readily available. I thank Infraline Energy for conducting such an important event which would help the industry deliberate on the possible challenges and come out with some workable solutions for the same.

Industry has many doubts about the process that would be followed in the upcoming auction process. How would the demand and supply gap be bridged as there are many plants which are not functioning because coal was not available to them for a long period. Some also feel that the price of blocks (in the auction process) is far from being reasonable. If you escalate the price of coal mines, the cost of power generation will go up and then the question arises, is India ready to afford the price of expansive power. So, there are many questions that the government needs to answer before it starts auctioning of coal blocks.

How do you think, these auctions will impact coal mining in the country? What kind of challenges will the industry have to face post the auction process?

My apprehension is there might be exploitation of labour. Because companies will have to pay high prices to secure coal blocks, there might be a tendency to reduce other costs which includes labour cost. At the same time, I also want to say that these are first of its kind process that the government is undertaking so mistakes are bound to happen. But what is important is that the government should be ready to take corrective measures as and when required.

These are not the last auctions that the country will see. There are lot more mines which may come up for auctions later. So, the government must be ready to learn from the mistakes that may be committed during the current auction process.

What kind of approach does the industry wants from the government. After all the government want to earn money from these auctions, which would then be used for social sector schemes?

No one is asking government to give the blocks for free. But it should support the industry wherever it can. For example, there are mines which are technically very difficult to mine. The industry may want the government to provide technical know how to make the task for companies simple. Every company may not have the competence that is required to mine difficult mines, in such cases government should come forward and help such companies mine coal.

As of now there is no incentive for mining companies to go for difficult mines i.e. which are deeper than 500 meters. So, if someone is willing to take up the challenge there should be some incentive provided from the government side.

But govt might say someone who has the competence should come forward and why should mining (in tough terrains) be incentivised as it may be a subjective exercise to do?

If government wants to attract private industry to do mining in not-so-easy-terrains, there must be some incentive for the companies to do so. No one wants to invest for loss. Think of such a scenario, where a small incentive may necessitate companies to build the competence required and thereby it will help the entire mining industry of the country.

Do you feel that the government should have allowed commercial mining for pvt players in the coming auction process?

See, I believe private companies will be allowed to to commercial mining in near future. It is expected. But for this auction, the bid document categorically said that the auction will only be for use of captive purposes. So, the government will follow the rules for this process.

However, in the next phase of auctions, it may allow commercial mining. But one thing I want to suggest here is that international coal prices are not likely to go very high now, so there has to be benefit for someone who opts for commercial mining.

What is your view on auctioning of coal linkages?

I have my reservations on auctioning of coal linkages. It is a challenging issue and big companies who already have cornered coal blocks may also want to auction coal linkages at a later stage and if linkage is cheap, why will somebody go for coal block as it is a tedious job to evacuate coal from the mine. People will prefer for coal linkage rather than going for a coal block.

So, while doing this government should also need to secure the interest of small sector because it is very difficult to for small sector companies to compete with giants. Interests of small businesses have to be protected.