India’s steel mills are seeking alternative sources for coking coal as
they reduce their reliance on Australia. In the first few months of this fiscal
year, sourcing from Australia has dropped from 70% to 50%. This shift has
prompted Indian mills to explore other options, including Mongolia, as a
potential supplier.
Australia has traditionally been the largest
supplier of coking coal to India’s mills. However, the increased sourcing from
other countries, such as the USA, Russia, Canada, Indonesia, New Zealand, and
Singapore, has provided Indian mills with more options. Indian mills are also
experimenting with different coal grades for blending, which is seen as a
positive development by Nagendra Nath Sinha, Union Steel Secretary.
In FY23, India imported over 56 million tonnes of
coking coal, with approximately 52% of that coming from Australia. In the first
two months of this year, India imported 9.9 million tonnes of coking coal, of
which nearly 50% was from Australia. Russia is the third-largest supplier to
India, followed by the USA. However, high ash content has limited the demand
for coal from Mozambique, another key supplier.
Despite being the world’s second-largest producer
of crude steel, India relies heavily on imported coking coal as a crucial raw
material. To reduce this dependence, discussions have been ongoing with
Mongolia. Although the ash content of Mongolian coal is a concern, Sinha
explains that Mongolia is building evacuation facilities on the Russian port
side, which could facilitate transportation. Mongolia is also establishing
processing and washing facilities at its mines, furthering the possibility of
sourcing coking coal from the country.
The shift in sourcing coking coal reflects India’s
efforts to diversify its supply chain and reduce reliance on any single
country. By exploring new suppliers and blending different grades of coal,
Indian steel mills are creating a more resilient and sustainable industry.