Coal price may be linked to global prices

The government has proposed to link the price of domestic coal to the imported coal to increase supply and bring down the rates.

"For higher supply of coking coal in the country and to ensure it is provided at a cheaper rate, the decision to yet reduce ash percentage with upgraded technology and the price of coking coal to be linked to imported coal are the measures under consideration," the coal ministry said in a statement.

An inter-ministerial panel had earlier suggested formulating an import parity-based pricing mechanism for domestic coking coal factoring the quality parameters.

A committee, headed by the coal additional secretary, has suggested the identification of additional coking coal blocks for production by Coal India Ltd (CIL) and the private sector and auction of CBM overlap coking coal blocks.

The coal ministry has set up the mission coking coal to evolve a road map for increasing production and utilisation of domestic coking coal.

Coking coal is mainly used in the manufacturing of steel through the blast furnace route. Domestic coking coal is high-ash coal and is not suitable for direct use in the blast furnace.

About 50 million tonnes (mt) of coking coal is imported by the country on an annual basis and the value of coking coal imported in 2020-21 was Rs 45,435 crore.

“It is encouraging

that pricing of coking coal will be linked to international prices as India is importing large quantities of coking coal to meet requirements from industries. This will boost domestic production as there will be right price signals for not only meeting a country's domestic demand but for the export market as well,” said Vibhuti Garg, energy economist, India lead– IEEFA.

However, there is technology innovation happening at the green hydrogen front which will replace the use of coking coal in factories.