Coking is Australia’s third largest export earner, and India, the global second-largest steel producer, is seeking to trim the reliance on Australia, the world’s second-largest producer of steel, has started a drive to reduce the reliance on Australian coking coal. A large steel industry defining economic activity in the country makes India look for other partners to supply coking coal. Looks like India is gearing up to try and benchmark its supplies with Mongolia in the form of coking coal to transform its steel production scenario.
The Importance of Coking Coal
Coking coal also known as metallurgical coal is used in the manufacture of steel. Coke test the blast furnace simulator is used in the production of pig iron and steel for conducting bench scale tests on the sample provided. India’s steel industry strongly depends on imported coal as the country constantly imports large amounts of it to satisfy the demands of the industry.
Coking Coal Australia is one of the biggest suppliers of coking coal to India which holds the major share of import of this product. However, over the years there has been a realisation by India that they have to cut down on the use of coal from Australia because of various reasons such as; price fluctuations, shortcomings in the supply chain and political tensions.
Mongolia: A New Frontier for Coking Coal
Mongolia is an East Asian-based developing country that is inbound and is categorised under the Asian land-locked countries which boasts of diverse natural resources such as; coking coal. Although the given country does not have very rich resources of coal, the reserves are approximated to be 1.4 billion tons, strongly with more than a third being coking coal. Indian steel producers thus have a competitive advantage when they use Mongolian coal since its ash content is low and the energy value is high.
The subject trial imports from Mongolia are expected to commence later this month and Indian steelmakers are keen to study the quality and suitability of coking coal in Mongolia. If so, there is a possibility of a vast diversification of India’s imported coking coal sources because of Mongolia.
Benefits of Diversification
India’s move to diversify its coking coal imports is expected to have several benefits, including:
– They are less dependent on Australian coal.
– Competition rises with the result of favourable prices and improved quality.
– Better supply chain robustness.
– Enhanced energy security.
Other Countries in the Mix
However, Mongolia is fairly recently entering the Indian coking coal import market, other sources are also being looked at. The top sources of supply risks for coking coal for India are- the USA, Russia, Canada, Indonesia, New Zealand, and Singapore.
Conclusion
Still, it is pertinent to understand that India’s decision to scout for coking coal imports from Mongolia is primarily based on the country’s strategy to diversify its supply chain and not solely to cut down on Australian coal. The idea of exporting Mongolian high-quality coal to India at a time when India is rapidly enhancing the production of steel products is deemed to be a game improvement. Consequently, the Indian steel industry is set to gain a better position on the global map and at the same time, India also is positioned very well to have a secure source of energy by exploring new avenues in coking coal.
