India to buy coking coal from Russia

The two countries sign MOU for collaboration in mining, steel sectors

India has opened up yet another door in cooperation with its strategic energy partner, Russia. Union Minister of Steel Ramchandra Prasad Singh on Thursday signed a memorandum of understanding (MOU) with Russia’s Minister of Energy Nikolay Shulginov for collaboration in the mining and steel sectors, with special focus on coking coal.

Russia will increase annual exports of coking coal to India to 40 million tonnes (mt) for the metal-producing industry, from 8 mt of all types of coal it supplies to the country now, said Shulginov on Thursday.

The move is part of India’s National Steel Policy, 2017, under which the country is aiming to reach 300 mt of steel production by 2030, while simultaneously working on forward and backward integration. The MOU between the two countries signed in Moscow envisages implementation of joint projects and commercial activities in coking coal, including long-term supplies of high-quality coking coal to India, development of coking coal deposits and logistics development, sharing of experience in coking coal production management, technologies of mining, beneficiation and processing, as well as training, said the steel ministry in its release.

In a recent interview to Business Standard, Singh had stated that the country was annually spending around ~75,000 crore on the import of coking coal and expressed the need to diversify supplies.

ONGC Videsh is discussing buying stake in Russia's Vostok oil project, as well as planned liquefied natural gas (LNG) project Arctic LNG 2. In 2018, the Ruiasowned Essar Oil sold India assets to Russian government-controlled Roseneftled consortium for $12.9 billion.

The MOU has come at a time when India’s non-power industries (aluminium, cement, and secondary producers of steel) are facing severe thermal coal shortage. Coking coal and thermal coal, however, have different applications and do not overlap.

Currently, India imports its coking coal largely from Australia, which places the domestic steel industry at the receiving end in terms of pricing power.

Diversification of supplies could be of some advantage, in terms of pricing for domestic steel consumers, said officials.

At present, almost all primary producers of steel in the country rely entirely upon imported coking coal to meet their supplies. Tata Steel, however, has around 25-30 per cent of its coal requirement met through domestic coking coal supplies, followed by state-owned Steel Authority of India.