Initiatives for reducing Coking Coal imports in India by enhancing domestic supply of the coal are gathering steam.
The state-run miner, Coal India Limited (CIL), will set-up 12 new Coking Coal Washeries by FY20 for washing Coking Coal extracted from mines in India. The washed coal will be suitable for usage by the steel makers in the country.
There is around 30 BnT of Coking Coal reserve in India, but a large part of the reserve is still unexplored, and the coal in the reserves is inferior in quality, which calls for washing the coal before being suitable for usage in steel making. Generally, 0.9 tonne of Coking Coal is required for producing one tone of steel. Since, the domestic production is insufficient to cater to the demand; the coal is imported from Australia, South Africa, Russia and other countries.
The Indian government is committed to lowering Coking Coal imports from the current annual levels of 85% of the domestic demand to around 65% by FY31, apart from promising adequate availability of the coal to Indian steel makers at competitive rates through friendly policy measures. In a PwC-ICC study, the steel consumption in India was at 66 MT in FY15, representing a three-fold increase over the consumption between FY06 and FY15. It has also been estimated that Coking Coal demand in the country will escalate to 96 MnT by FY20.
The Steel Ministry also expects formulation of a policy that in auctioning of Coking Coal mines, it will be made mandatory for the successful bidders to wash the coal in the pit-head washeries before utilizing the coal.
Besides, there is also a possibility that CIL will offer Coking Coal through auction to other consumers only after meeting the long-term supply agreement with public sector steel companies.
Source: CoalMint Research
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