Indian sponge iron mills are now experimenting with Russian coal which sources say, is not only coming in cheaper by ₹600-1,000 per tonne over popular South African variants; but are seen as a better alternative to blending needs.

Since Russian coal faces lower volatile matter, blending with domestic coal needs to be done. South African coal imports into India is around 25–26 million tonnes (mt) per annum.

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According to sources, for sponge iron mills mine linkages have expired, and Coal India has not renewed them. Increased demand in Europe recently is also pushing up South African coal prices.

Most mills have now gone for an 80:20 blend – mixing of 80 per cent imported coal with 20 per cent Indian coal – in their blast furnaces.

For DRI players, South African coal has been the predominant offering of choice. In view of rising prices, some mills explored Mozambican coal.

Specification suits Indian mills

According to Deependra Kashiva, Executive Director, Sponge Iron Manufacturers’ Association (SIMA), Russian coal emerged as an alternative because some of the coal variants have a fixed carbon (FC) content of above 55 per cent have yielded positive results.

As a result, lower quantity of Russian coal is being required over some of the popular South African variants to make one tonne of direct reduced iron (sponge iron).

“Russian offerings are suiting furnace requirements and are economical too. Price of some variants are around ₹1,000 per tonne lower than the South African coal,” he told BusinessLine.

Orders by SAIL

Even state-owned steel-major SAIL has ordered 75,000 – 80,000 tonne of Russian coal which are expected to arrive by September-end.

A senior official at SAIL said, the first lot will be used “on experiment purposes” and to be blended with Indian coal and used in blast furnaces.

“This is the first time we are trying such a blending combination by using Russian coal. If successful, we will place more orders,” he said.

Russian coal vs S African coal

The port-side price of Russian coal (6100-6300 NAR grade) are at ₹17,000 per tonne at Paradip Port as against the comparable South African RB2 coal variant at ₹17,400 per tonne. While price of the popular ₹17,000 per tonne ex-Vizag, data by CoalMint, the coal vertical of SteelMint said.

Around 0.7 tonne of Russian coal is used against 0.8-0.9 tonne of RB2 and 1.1 tonne of RB3 coal to make 1 t of sponge iron.

“South African coal bookings by Indian players were relatively low as they await more clarity on prices going ahead,” the report added.