JSW Steel Faces Hurdles in Sourcing Mongolian Coking Coal

NEW DELHI: India’s leading steel manufacturer, JSW Steel, is encountering difficulties in procuring coking coal from Mongolia due to unresponsive suppliers and logistical challenges, according to sources familiar with the situation.

The company intended to import 2,500 metric tons of coking coal from Mongolia, while the Steel Authority of India aimed to import 75,000 metric tons.

India, the world’s second-largest crude steel producer, relies on imports for 85% of its coking coal needs, with Australia being the primary supplier. The country’s steel demand has surged due to rapid economic expansion and increased investment in infrastructure.

India has been exploring collaborations with Mongolia, a country abundant in resources, to diversify its supply chain for this vital steelmaking component. Industry experts have recognized Mongolia as a potential source of high-quality coking coal at more competitive prices.

“We are not getting any feedback from the Mongolian side, which is creating complications,” one of the sources stated, wishing to remain anonymous because the discussions are confidential.

“The transport routes from Russia are congested, and acquiring the material from China on a consistent basis might not be viable,” the source added.

Steel Secretary Sandeep Poundrik noted that there were logistical obstacles in sourcing material from landlocked Mongolia.

Neither the Mongolian prime minister’s office nor JSW Steel responded to requests for comment.

Relations between India and China have deteriorated since the border clash in 2020, which resulted in casualties on both sides. However, there have been indications of improvement, with both countries agreeing to address trade and economic issues in January.

Separately, JSW Steel, which imports nearly a third of its coking coal from Russia, does not intend to increase its imports from Moscow, according to the source.

“We prefer not to increase our reliance on a single geographical area,” they clarified.

The company also secures coking coal from Australia, the United States, and Mozambique.

Chief executive Jayant Acharya mentioned that JSW Steel is open to acquiring coking coal assets if they are commercially and strategically sound.

India’s coking coal imports are expected to rise because of the constrained availability of this essential steelmaking ingredient amidst rising steel production capacity, the steel secretary stated recently.