India’s steel industry, a cornerstone of its economic infrastructure, has long been hindered by a significant reliance on imported coking coal. With approximately 85% of the country’s coking coal needs fulfilled through imports, the cost of steel production remains vulnerable to international price fluctuations and supply chain disruptions. To address this critical issue, NITI Aayog, the national policy think tank, has recommended the inclusion of coking coal on India’s list of critical minerals. This proposal comes at a time when the country is striving to reduce its dependence on foreign resources, enhance domestic supply, and ensure that the steel industry, a major driver of infrastructure and job creation, can sustain its growth trajectory.
Coking coal, which is essential for the production of steel, accounts for roughly 42% of the overall cost of steel manufacturing. Despite having substantial reserves of both prime and medium-quality coking coal, India continues to import vast quantities of this resource. The country holds approximately 16.5 billion metric tons of medium-quality coking coal and an additional 5.13 billion metric tons of prime coking coal, but in the fiscal year 2023-24, India imported around 58 million metric tons of coking coal. This massive importation cost the nation approximately ₹1.5 lakh crore, highlighting the economic strain caused by the over-dependence on foreign sources. NITI Aayog's report, “Enhancing Domestic Coking Coal Availability to Reduce the Import of Coking Coal”, underscores the need to leverage the country’s own coal reserves to achieve greater self-sufficiency, reduce the financial burden of imports, and improve national energy security.
The recommendation to add coking coal to India’s critical minerals list follows a global trend of recognizing the strategic importance of raw materials vital for industrial production. For example, the European Union has already included coking coal in its list of critical raw materials, alongside other high-demand resources like lithium and cobalt, which are necessary for green energy technologies. Recognizing coking coal as a critical mineral in India could pave the way for more focused policy interventions, attracting investments, enhancing domestic coal production, and ensuring that the steel industry remains competitive both nationally and globally. Moreover, as India works toward achieving Net Zero emissions by 2070, there is a pressing need to balance industrial growth with sustainable practices. Increasing the domestic production of coking coal, while minimizing environmental impact, will be a crucial step in this direction.
One of the central recommendations in the NITI Aayog report is to amend the Coal Bearing Areas (CBA) Act, 1957, to facilitate greater private sector participation in coal mining through public-private partnerships. Currently, the coal sector in India is largely dominated by state-owned entities. However, the report advocates for allowing private entities to retain lease rights to coal deposits, which would serve as an incentive for private companies to invest in domestic coal extraction and processing. Such reforms would not only increase the pace of coal mining but also improve the efficiency of coal utilization, helping India unlock the full potential of its vast coking coal reserves. This policy shift could result in a more dynamic and competitive coal mining sector, leading to increased coal availability for the steel industry and other industrial sectors.
The report also emphasizes the need to improve the performance of coal washeries, which play a crucial role in cleaning raw coal to produce higher-quality, usable coking coal. Public-sector washeries in India have faced significant challenges, with low capacity utilization rates of around 32% and suboptimal clean coal yields of 35-36%. In contrast, private-sector washeries have been far more efficient, operating at a capacity utilization rate of approximately 75%. To address this disparity, NITI Aayog has recommended the promotion of joint ventures between public and private entities to enhance the operational capacity of coal washeries. Additionally, the report proposes that JV companies be allowed to sell byproducts generated during the coal washing process, such as low-quality coal, which could help subsidize the costs of clean coal production. This would ultimately lower the cost of coking coal, making it more affordable for the steel industry and improving the competitiveness of Indian steel in global markets.
Coking coal is not only essential for steel production but also for a range of other industrial applications, including energy generation and the production of chemicals. The growing global demand for steel, particularly in developing countries and emerging economies, has further underscored the importance of securing reliable, cost-effective sources of coking coal. As India continues to expand its industrial capacity to meet the demands of urbanization and infrastructure development, the availability of domestic coking coal will be key to ensuring that steel production remains affordable and efficient. By reducing the need for imports, India can stabilize the supply chain for steel, which is vital for the country’s construction projects, including highways, bridges, and residential buildings.
The strategic importance of coking coal also extends to India’s broader goals of energy security and economic sustainability. Currently, the country’s dependence on foreign coal exposes it to supply risks and price volatility in the international market. By increasing domestic production, India can reduce its vulnerability to external shocks, ensuring a more stable and predictable supply of energy resources for the steel and energy sectors. This would not only help lower the cost of steel production but also foster the long-term sustainability of key industries, driving economic growth and creating jobs across the country.
Globally, nations are increasingly focused on securing critical resources for their industrial sectors. With rising concerns about climate change and the transition to greener energy, there is also growing interest in more sustainable mining and processing practices. India’s move to enhance domestic coking coal production must, therefore, be accompanied by the adoption of environmentally responsible mining techniques and clean technologies. This would allow the country to meet its growing industrial demand while minimizing the environmental impact of coal extraction and use.
By recognizing coking coal as a critical mineral and implementing the policy recommendations proposed by NITI Aayog, India has the potential to reduce its import dependence, lower steel production costs, and achieve greater energy security. The success of these initiatives will not only benefit the steel industry but will also support the broader goals of infrastructure development, economic growth, and job creation. As India strives to become a global manufacturing hub and achieve its ambitious environmental goals, securing a sustainable and cost-effective supply of coking coal will be crucial in ensuring the long-term success of its industrial sector.
