Exploring sources. India to tap new coking coal markets in Mongolia, ramp up production in Mozambique

India is exploring coking coal sourcing options beyond Australia, its largest supplier, as it taps into new markets like Mongolia; while it firms up plans to ramp up production at its own mines in Mozambique in Africa, says Nagendra Nath Sinha, Secretary, Steel Ministry.

Discussions are on to increase sourcing of coking coal sourcing from Russia too, he said.

India, the world’s second largest producer of crude steel, is also the largest importer of coking coal, which is a key steel making raw material. The domestic requirement is 57 million tonnes (mt), majority of which is imported.

Coking coal imports saw a near 9 per cent rise year-on-year for the April – February period to around 52 mt, with steel mills resorting to sourcing from nations – like Indonesia, Russia, the US, Mozambique and Canada — to counter price fluctuations and supply issues faced with Australian coking coal.

“Currently, Australia is the largest supplier for Indian steel mills. And in order to de-risk, we have been exploring other options and trying to source from other countries. Accordingly, in October 2021, we entered into an agreement with Russia to supply coking coal. We are now exploring sourcing options form other countries like Mongolia, and Mozambique – where we have our mines,” Sinha told businessline.

Discussions are on to increase coal supplies from Russia too, which generally come at an up to 20-30 per cent discount. Trade sources suggest Russian coking coal supplies to India saw a 130 per cent increase, year-on-year, to 2.64 mt (1.15 mt).

Mongolian coal on exchanges

Mongolia, it is being said, is exporting its coal at prices set via auctions on the Mongolian Stock Exchange (MSE), beginning February, and has reportedly stopped signing direct sales contracts with overseas buyers.

The government there approved a regulation requiring parties involved in coal exports to make their trades through open electronic trading via the MSE.

Under the previous trading mechanism, buyers only paid mine-mouth prices to miners and sorted out the logistics by themselves. The new so-called “border prices” will factor in the transportation fees and aim to simplify the coal export process.

Discussions with Coal Ministry

According to Sinha, discussions are also on with the Ministry of Coal to increase supplies to steel mills. Plans are afoot to allow steel mills to set up washeries too.

“We are in discussions with the Ministry of Coal too as there are plans under Mission Coal to increase supplies. By 2029-30, coking coal supplies from Indian mines are expected to reach 120 mt. And nearly 40 mt of this (one third) will be washed coking coal,” he said.

Mozambique coal supplies

The International Coal Ventures Private Ltd (ICVL) – a JV of SAIL, NMDC, RINL, CIL and NTPC — owns three coal mines in Mozambique that include Benga, Zambeze and Tete East. Currently, only Benga mine is operational. The total saleable coal (low ash and thermal) production was 1.74 mt in FY22 and it will be around 1.70 mt, this fiscal.

According to Sinha, ICVL has made a profit after tax (PAT) of $ 68.6 million in FY22; and a PAT of $ 66.15 million April – Sept of FY23.

“The expansion and production of coal mines will be finalised in sync with the coking coal demands of SAIL and RINL”, he said adding that a detailed project report (DPR) is being prepared for expansion projects i.e. doubling the capacity of Benga, starting of Zambeze or Tete East to understand the technical feasibility and financial viability of the project.

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