New Import Strategy
India is changing its approach to import cooking coal by looking to bring in Mongolian coal through Russia. This shift comes after problems with Australian coal supplies that have affected steel production in India.
Cost Benefits
Mongolian coal is about $50 cheaper per metric ton than Australian coal. Indian steel companies need around 70 million metric tons of cooking coal each year, and they get 85% of it from imports. Although Mongolian coal is high quality and competitively priced, transporting it through Russia can be challenging because of the longer distance.
Geopolitical Concerns
India has been cautious about relying on coal shipments that pass through China, especially given the tensions between the two countries. As a result, the Indian government is considering using Russian routes for more regular shipments of Mongolian coal.
Past Disruptions
Last year, issues with Australian coal raised concerns in India’s steel industry. In the first half of this fiscal year, India imported 29.4 million metric tons of cooking coal, which is a 2% increase from the previous year, mostly from Australia.
Moving Forward
While some Mongolian coal has arrived via China, India wants to create a more dependable and diverse supply chain through Russia. The steel industry is pushing for this change to ensure they have a consistent and cost-effective source of cooking coal in the future.