Posted on 01 Oct 2024
An Indian delegation, including senior government officials, is set to visit Mongolia in October to discuss the import of coking coal from the landlocked nation, according to local press reports.
This move aims to diversify India’s raw material sources, thereby enhancing the availability of the key steelmaking resource and optimise production costs, notes Kallanish.
India imports around 56 million tonnes of coking coal annually, with 70-90% sourced from Australia, resulting in high logistics costs due to extended shipping times.
Mongolia, being geographically closer, offers potential cost benefits for Indian steelmakers.
Indian steel secretary Sandeep Poundrik says: "We are exploring the possibility of importing coking coal from Mongolia.” An industry delegation has already visited the country, with a government team set to follow, he adds.
Indian steel major JSW Steel is also studying the logistics of Mongolian coal imports in collaboration with the government. Managing director Jayant Acharya notes that the transportation route through China or Russia presents significant challenges.
However, the company is negotiating trial shipments to assess the coal’s quality. Acharya stresses that logistics must be economically feasible for imports to materialise.
India has also turned to Russia for coking coal due to lower prices, despite the sanctions on the country.
With coking coal making up 35-40% of steel production costs, finding alternative sources like Mongolia is crucial to reducing over-dependence on Australia and ensuring a stable supply chain.
Source:Kallanish
