India's steel giants, JSW Steel and the Steel Authority of India (SAIL), are exploring coking coal imports from Mongolia, aiming to reduce dependence on traditional suppliers like Australia. This strategic move follows disruptions in Australian supply due to erratic weather conditions.

JSW Steel plans to procure 2,500 metric tons, while SAIL targets 75,000 metric tons from Mongolia. These efforts come as India, the world's second-largest crude steel producer, imports 85% of its coking coal, vital for steel production. Mongolia has emerged as an attractive alternative, offering higher-grade coal at prices approximately $50 per ton lower than Australian coal.

Challenges and Opportunities Although landlocked, Mongolia’s coal is expected to be transported via Russia or China, requiring robust logistical coordination. The Indian government actively supports these diversification efforts to reduce over-reliance on a single source and enhance supply chain stability.

Steel Industry Growth and Demand India’s growing steel demand, driven by rapid economic expansion and major infrastructure projects, makes cost efficiency crucial for producers. By sourcing more affordable coking coal, steelmakers like Jindal Steel and Power—also considering Mongolian coal—aim to meet increasing demand while containing production costs.

Rising Import Trends In the first half of FY24, India’s coking coal imports rose by 2% to 29.4 million metric tons, reflecting sustained demand. Traditionally, over 50% of India’s annual 70 million metric tons of coking coal imports come from Australia, underscoring the need for supply diversification.

Mongolia’s potential as a reliable supplier is a significant development for India's steel industry, offering a competitive edge in price and quality. The collaboration is expected to strengthen India's position in global steel markets while aligning with government initiatives for resource diversification.