India is set to import coking coal from Mongolia on a trial basis starting later this month, as New Delhi looks to diversify its sources of this key steelmaking raw material and reduce its over-reliance on Australia.
According to two sources familiar with the matter, Indian steelmakers including JSW Steel and the state-owned Steel Authority of India (SAIL) are poised to receive coking coal shipments from Mongolia after months of negotiations.
JSW Steel is expected to receive around 30,000 metric tons of coking coal from Mongolia, while SAIL is likely to get 3,000 to 5,000 metric tons. This would be the second such trial shipment for JSW Steel, after it imported 8,000 metric tons of coking coal from Mongolia in 2021.
The supplies from Mongolia will be routed through Chinese ports, but Indian authorities are wary of relying entirely on China for steady supplies of Mongolian coking coal. The sources say India is trying to figure out alternate routes to ensure regular supplies from Mongolia, which offers superior grades of coking coal.
The move comes as India, the world’s second-biggest crude steel producer, has struggled with volatile supplies of coking coal from Australia, which normally accounts for more than half of the country’s annual imports. Indian steel companies consume around 70 million metric tons of coking coal annually, with imports making up around 85% of the total requirement.
In recent months, Indian steelmakers have stepped up coking coal imports from Russia to take advantage of cheaper prices resulting from Western sanctions. However, diversifying supply sources, including from Mongolia, is seen as crucial to India’s efforts to ensure stable and affordable coking coal for its burgeoning steel industry.