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India's steel industry seeks new ways to source coal

India's steel mills are considering alternatives to diversify their supply of coking coal used in steelmaking.

India's steel industry seeks new ways to source coal

With sourcing from Australia declining, India continues to explore the possibility of tapping new sources such as Mongolia. Australia is the largest supplier of coking coal to Indian mills. Met coke price (FOB-Australia) was at $314 per tonne on Friday.

According to Union Steel Secretary Nagendra Nath Sinha, Indian mills have increased sourcing from alternative countries such as the US, Russia, Canada, Indonesia, New Zealand and Singapore. Increased sourcing from these countries has led to multiple options for mills here.

"Mongolia continues to be a country we cooperate with on coking coal. On the other hand, Indian mills seem keen to tap new supplier countries like Russia. They are also experimenting with different coal grades for blending, which is a good sign."

India's coking coal imports were over 56 mt in FY23, of which almost 52% (around 35 mt) came from Australia, compared to 70% in FY22 when 57 mt was imported. The trend has continued this year. In the first few months, India imported 9.9 million tons of coking coal, a key raw material for steelmaking, of which about 4.9 mt (about 50 percent) came from Australia.

According to DGFT data, Russia is India's third largest supplier at 1.65 mt (April-23 June), while the US is the second largest at 1.96 mt. Mozambique is another major supplier, but high ash content has limited demand for offers from the African country.

The biggest problem is ash content and evacuation

Sinha said talks with Mongolia have been ongoing for some time.

While the ash content of Mongolian coal is a concern, a second issue that has arisen is the evacuation or transportation of the coal. Mongolia is a landlocked country with China and Russia as its largest and key neighbors. We are told that Mongolia is building unloading facilities on the Russian port side and we are monitoring this development."

Underlining that Mongolia is also building processing and washing facilities at its mines and working on logistics there, Sinha said, "We have contacted them to explore the possibility of supplying coking coal. Therefore, when these facilities become operational, we can benefit from that market."


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