The government is planning to introduce a greenfield washery development policy aimed at increasing the utilisation of domestic coking coal by private steelmakers. Under this policy, the coal ministry will provide land to private steel manufacturers on long-term leases, along with assured coking coal supplies. This initiative is intended to encourage steelmakers who currently import coking coal to establish washeries on the government-provided land, where they can process domestic coking coal for captive consumption.
The policy is slated for introduction shortly after the general elections. It will require steel companies to utilise the coal exclusively for their captive consumption, mandating that the end-users must be steel companies. However, the launch of this policy framework for greenfield washery development will also hinge upon the response to the planned monetisation process for abandoned washeries of state-run companies.
Recently, the coal ministry announced the commencement of the monetisation process for the Dugda coal washery of Bharat Coking Coal Ltd (BCCL). This process will involve a transparent competitive auction and will award the washery to a steel manufacturer. Additionally, three more abandoned washeries, including Mohuda and Madhuband washeries, will also be included in the auction process. The successful bidder for the non-operational washery will be granted coal linkage corresponding to the highest premium paid for the coal quantity and will be responsible for renovating and operating the washery.
This moves to monetise washeries and establish a policy for greenfield washery development aligns with the government’s strategy to reduce import dependency for coking coal. Despite aiming to halt thermal coal imports by financial year 2026 (FY26) through a rapid increase in domestic production, achieving complete self-sufficiency in coking coal production appears unlikely due to the high ash content and low quality of local coking coal. Thus, there is a crucial need to thoroughly wash and supply raw domestic coking coal to the steel sector to substitute imports. Currently, India’s coking coal washing capacity stands at 61 million tonnes (mnt).