Reducing Dependence on the Import of the Coking Coal 

Syllabus: GS3/Economy

Context

• Niti Ayog has released the report ‘Enhancing Domestic Coking Coal Availability to Reduce the import of Coking Coal’.

Major Findings 

• Resources of Coking Coal: As of 2023, India’s proved geological resources of prime coking coal and medium coking coal are estimated to be 5.13 BT and 16.5 BT, respectively. 
• Imports: During the last five years, coking coal imports accounted for 22 – 27% of the total coal imported into India.
  • The total value of coking coal imports into India crossed Rs. 1 trillion for the first time in FY 2021-22.
  • Australia supplied 54% of India’s coking coal imports in FY 2022-23. 
• Volatile Prices: The prices of coking coal are highly volatile due to the dominance of a few countries (mainly, Australia).  
• Share in Cost of Steel Production: Coking coal accounted for approximately 42% of the cost of steel produced in India, the Ministry of Steel is making efforts to reduce the import bill on coking coal by diversifying the import sources. 
• Critical Mineral: NITI Aayog can convince the Government to declare coking coal as a ‘critical mineral’ for India for ramping up the production of domestic metallurgical coal to enhance the competitiveness of India’s booming steel sector.

Importance of Coking Coal for India

• Coking coal, also known as metallurgical coal or “met coal,” is a type of coal that is used in the steelmaking process. 
• It’s essential in the production of coke, a key component in the steelmaking process. 
• Coking coal needs to have specific properties such as high carbon content, low sulfur and phosphorus content, and strong coking properties to be suitable for steelmaking.

Challenges 

• Import dependency :  : India remains one of the world’s largest importers of coking coal, importing from countries like Australia, the U.S., Indonesia, Mozambique, and Russia.
• High Demand from Steel Mills: The rise in imports is driven by strong demand from India’s steel mills, which are the largest consumers of coking coal, a key raw material in steel-making.
• Coking Coal Shortages: Indian steel companies, which consume about 70 million metric tons of coking coal annually, are facing shortages and high prices. 

Steps 

• India is targeting a 20% increase in coking coal production, aiming for 80 million tonnes (mt) in FY25, up from 66.55 mt last year, as part of efforts to reduce its coking coal import bill.
• The government has launched ‘Mission Coking Coal’ in August, 2021 to suggest a roadmap to augment the production and utilization of domestic coking coal in India by 2030.

Suggestions and Way Ahead 

• Coking coal is vital for India’s steel industry and economic growth. Addressing the challenges in domestic production and reducing import dependency through strategic policy changes and government interventions is crucial for ensuring coking coal security and supporting the country’s industrial development
• The government should provide a special dispensation to enhance domestic coking coal production, ensure security of supply for India’s steel sector and reduce the country’s import bill.
• Considering India’s commitments to Net Zero by 2070, the country’s interests would be better served by fully utilising the proved reserves of medium coking coal (16.5 BT) in India for metallurgical purposes.

Source: IE