India plans to form a consortium of state-owned companies to facilitate coking coal imports to help domestic steel companies tide over shortages, two government sources said. Stung by lower supplies and higher prices of coking coal, leading Indian steel companies have petitioned the government to help boost supplies of the key steel-making raw material.
Indian steel companies consume around 70 million metric tons of coking coal annually, and imports constitute around 85% of the country’s total requirement. Steel mills in India, the world’s second-biggest crude steel producer, have struggled with volatile supplies of coking coal from Australia, which normally accounts for more than half of India’s annual imports.
Other than Australia, India imports coking coal from the United States, Indonesia and Canada, among others.
The consortium of government-backed companies would make it easier for steel companies to import coking by reaching out to suppliers in different countries, negotiating prices and other terms of import deals, and eventually selling the imported raw material to local steel mills, the sources said. The sources, with direct knowledge of the matter, didn’t wish to be identified as they are not authorised to talk to the media. They did not name any of the companies that might be involved. The consortium would also look at diversifying India’s coking coal imports.
“The idea is to get the best price and look beyond Australia to diversify the imports basket,” one of the sources said.
The federal Ministry of Steel didn’t immediately reply to an email seeking comments. In November, Australia assured India of steady supplies of coking coal, but supplies are still patchy.
India would source more coking coal from Russia to make up for the sporadic Australian supplies, the sources said. The other advantage of buying from Moscow is that Russian supplies are cheaper than Australian cargoes, they said.
Before the consortium takes shape, the government will soon formally resume talks with Mongolia for sourcing coking coal, the sources said. Mongolia, rich in mineral resources and a landlocked country that neighbours China and Russia, is yet to find a viable route to transport the raw material into India, the sources said.