The Indian government’s move to slash import duty on coal to arrest spiralling steel prices has an unintended beneficiary: the cement industry. Larsen & Toubro and Gujarat Ambuja Cements, two of the larger cement producers with shore-based facilities which rely on imported coal, are set to witness a reduction in manufacturing costs, especially at a time when international coal prices have hit a five-year high. Late last week, the Union finance ministry issued notifications for reducing customs duty on non-coking coal from 15 per cent to 5 per cent.
Gujarat Ambuja Cements, the fourth largest cement maker, imports around 0.5Mta, while L&T, the largest player, imports around 0.75Mta. "We expect our coal costs to be lower by around 15 per cent. This would be a welcome relief at a time when freight costs have shot up substantially and coal prices are at a record high," said GACL’s executive director Anil Singhvi. International coal prices are currently ruling at a five year-high at $39 per tonne. Freight charges have risen by around 30 per cent during the last six months.
