The Telegraph
Thursday , August 14 , 2014
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Coal-mining ban hits cement prices

- Firms anticipate 10% rise in costs

Guwahati, Aug. 13: The cement industry in the Northeast is wary of prices escalating by about 10 per cent following the National Green Tribunal’s ban on coal mining in Meghalaya.

Coal is a major fossil fuel used by cement manufacturers to generate heat to make clinkers. Sources in the industry said coal prices have doubled in the past four months causing an increase in cement prices by Rs 35 per bag.

On April 17, the green tribunal put an interim ban on rat-hole coal mining in Meghalaya after the All Dimasa Student’s Union and Dima Hasao District Committee filed a petition before it, stating that the acidic discharge from the coal mines of Meghalaya was polluting the Kopili river in Assam. On August 2, the tribunal upheld its interim order.

“The tribunal’s ban on coal mining in Meghalaya has definitely affected local cement players apart from impacting several livelihood. Regional cement players are already feeling the pinch and some may be forced to shut down because of cost in-competitiveness,” said Madhur Agarwala, managing director of Purbanchal Cement Ltd.

Over 80 per cent of Purbanchal Cement’s industrial grade non-coking coal comes from Meghalaya while 10 to 15 per cent comes from Aruna-chal Pradesh and Nagaland. “The government needs to intervene and expedite coal linkage applications to safeguard interests of cement manufacturers here,” Agarwala said.

The average retail price of a cement bag ranges between Rs 340 and Rs 350.

Bhutan-based Dungsam Cement Corporation Ltd (DCCL), which started its operations in the Northeast earlier this year, is anticipating a price hike of nearly 10 per cent once the demand picks up post-monsoon. “The demand, as it is, is relatively sluggish during the monsoon season. But once winter sets in and construction activities pick up, the price per bag will go up,” Rajiv Khanna, sales and marketing in-charge, India, for DCCL, told The Telegraph. Dungsam meets 50 per cent of its coal from Meghalaya.

Local companies also apprehend a situation of the market being flooded with products from mainland India if the tribunal ban persists. “It will be a precarious situation for both firms and individual builders. Homes will cost more,” an official of a cement company here said.

Firms here said import of coal will shoot up costs. “Coal from outside the Northeast will be expensive and make companies here non-competitive,” Bajrang Lohia, director of Topcem Cement, said.

Frontline national players in a bid to manage costs are gradually substituting its fossil fuel consumption with alternative energy sources.

Sources in the industry said companies in the region might not opt for alternative energy sources, as setting up a plant for generating eco fuels would not be cost-effective.

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