India to get coking coal from Mongolia on trial basis in July

India will import coking coal from Mongolia on a trial basis from later this month, two sources familiar with the matter said, as New Delhi seeks to diversify imports of the key steelmaking raw material to cut over-reliance on Australia.

Steelmakers including JSW Steel and the state-owned Steel Authority of India (SAIL) are poised to receive coking coal shipments from Mongolia after months of negotiations, said the sources, who did not wish to be named in line with official rules.

India's Ministry of Steel, JSW Steel, and SAIL did not immediately respond to Reuters emails seeking comments.

JSW Steel is expected to receive around 30,000 metric tons of coking coal from Mongolia and SAIL is likely to get 3,000 to 5,000 metric tons, the sources said.

For JSW Steel, this would be the second such shipment after 2021, when India's biggest steel maker bought 8,000 metric tons of coking coal from Mongolia, the sources said.

The supplies would come to India via Chinese ports, but Indian authorities do not think New Delhi should entirely rely on China for steady supplies of coking coal from Mongolia, the sources said.

Relations between India and China have been tense since the biggest military confrontation in decades on their disputed Himalayan border killed 20 Indian and at least four Chinese soldiers in June 2020. Thousands of troops remain mobilised on each side.

India is trying to figure out alternate routes for the supplies of Mongolian coking coal to India, the sources said, without giving details.

Indian mills have asked the government to step in and help work out the routes that would ensure regular supplies of coking coal from Mongolia, which offers superior grades, they added.

Without a viable and dependable route, Mongolia, rich in mineral resources, struggles to sell raw materials to countries such as India.

Some Indian companies are also looking at either acquiring or leasing coal and copper assets in Mongolia.

Indian steel companies consume around 70 million metric tons of coking coal annually, and imports constitute around 85% of the country's total requirements.

Steel mills in India, the world's second-biggest crude steel producer, have struggled with volatile supplies of coking coal from Australia, which normally accounts for more than half of India's annual imports.

Indian steelmakers have stepped up coking coal imports from Russia in recent months to take advantage of cheaper prices - a result of Western sanctions targeting Moscow for the war in Ukraine.

During the first half of 2024, Russia emerged as India's third-biggest supplier of coking coal by selling it 3.3 million metric tons, data from commodities consultancy BigMint showed.