India’s Steel Authority of India Ltd (SAIL) is set to import a trial shipment of coking coal from Mongolia this month. In a bid to facilitate quicker testing, the company may opt to transport this sample by air. This initiative aims to diversify SAIL’s source of coking coal, moving away from its heavy reliance on Australia, which has faced several supply disruptions recently.
The trial shipment will comprise 1 metric ton of coal sourced from landlocked Mongolia. Depending on logistical considerations, SAIL might explore routing this shipment through China as an alternative to aerial transport. Following the quality assessment of the initial sample, SAIL is also planning to import a larger shipment of 75,000 metric tons if the results are favorable.
Currently, India meets approximately 85% of its coking coal requirements through imports, with over half of that volume coming from Australia. To alleviate dependencies on Australian coal, India has been looking toward alternative sources, and Mongolia has emerged as a promising candidate due to its extensive reserves and competitive pricing. However, logistical challenges persist due to Mongolia’s landlocked status and underdeveloped infrastructure.
Sandeep Poundrik, a senior official in India’s Ministry of Steel, highlighted last month that transporting bulk cargo from Mongolia is fraught with difficulties. He noted that as India’s steel production capacity ramps up, the demand for coking coal imports is expected to rise significantly. According to commodities consultancy BigMint, Indian steel mills are actively seeking to diversify their coking coal sourcing, tapping into regions like Mozambique, Russia, the U.S., Canada, and Indonesia.
Additionally, JSW Steel, India’s largest steelmaker by capacity, has reported challenges in sourcing coking coal from Mongolia due to unresponsive suppliers and transport constraints.