India is facing a shortage of coking coal, a crucial raw material for steel production. This shortage is a result of unfavorable weather conditions in Australia, a significant coking coal supplier to India, combined with India's growing steel demand.
India and Australia will engage in discussions to secure a stable supply of coking coal. The talks are expected to contribute to alleviating the challenges faced by Indian steel producers due to decreased supply and rising prices.
Despite an increase in purchases of more affordable coking coal from Russia, Indian steel plants remain largely dependent on Australian mines. Concerns have arisen due to a significant 50% increase, exceeding $350 per ton, in the prices of Australian coking coal last month, indicating a decrease in supply from Queensland mines, according to an Indian government official.
India relies heavily on imported coal with high ash content, and currently, 80-85% of the demand is met by foreign sources. In an effort to reduce this dependency, the government has initiated a program with the goal of reaching 140 million tons of raw coking coal production by 2030. This program involves exploring and producing domestic coking coal, establishing processing facilities, and allocating mines through auctions.
Experts warn that if decarbonization efforts progress slower than expected or if there is an increase in steel demand, a potential global shortage of coking coal in the early 2030s could impact the steel industry. The steel sector's reliance on a narrow supply base continues to be a significant source of disruption and fluctuation.
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