JSW Steel Limited continues to prioritize raw material security and cost optimization as a key element of its growth and sustainability strategy. In line with this vision, the company has focused on establishing a firm domestic coking coal supply. A significant development in this direction came on March 28, 2025, when JSW Steel was declared the Successful Bidder for the Dugda Coal Washery project, located in Bokaro District, Jharkhand. The project is being undertaken in collaboration with Bharat Coking Coal Limited, a subsidiary of Coal India Limited.
Strategic Objectives and Plan
To bolster its long-term competitiveness, JSW Steel has been pursuing multiple strategies to secure a reliable and cost-effective supply of coking coal, a crucial raw material for steelmaking. The company has already taken significant steps toward securing domestic coking coal by acquiring three coking coal mines in India. These acquisitions will allow JSW Steel to source coal at a lower cost compared to importing it from other countries, thus improving overall cost efficiency and supply stability.
The company has been actively working on integrating domestic coal supply into its operations, which is intended to mitigate the volatility of global coal prices. With increasing concerns over the future availability of imported coking coal and the fluctuating costs of raw materials, securing domestic coking coal becomes a vital factor in achieving sustainable steel production at a competitive cost.
Key Development: The Dugda Coal Washery Project
The Dugda Coal Washery, with a capacity to process 2 million metric tons per annum of raw coking coal, will serve as a critical asset for JSW Steel in its quest for greater self-reliance in raw material procurement. This project will provide the company with a firm linkage of 2 MTPA of raw coking coal. Moreover, the agreement ensures that JSW Steel has a right over the washery product, which will be crucial for improving the quality and cost-effectiveness of the coal used in its steelmaking process.
Letter of Intent and Terms of the Agreement
On March 29, 2025, JSW Steel received the Letter of Intent from BCCL, formalizing the company’s position as the successful bidder for the Dugda Coal Washery project. The agreement will last for a period of 25 years, ensuring a stable and long-term supply of raw coking coal for JSW Steel. Under the terms of the agreement, BCCL will supply raw coking coal at a premium of 2.35% over its notified price, which aligns with the market price trends, ensuring competitiveness while maintaining consistent supply.
Strategic Partnership with JSW Energy
Additionally, JSW Steel is not only securing the supply of coking coal through the Dugda Coal Washery but also leveraging the byproducts of the washing process. Through its subsidiary, JSW Energy (Utkal) Limited, JSW Steel plans to consume the byproducts from the Dugda Coal Washery. These byproducts will be sold at market-linked prices, creating an additional revenue stream for the company and enhancing its overall profitability.
By integrating energy consumption from the washery byproducts, JSW Steel can further optimize the operational efficiency of its steelmaking processes, reduce waste, and contribute to more sustainable practices in the industry.
Implications for Cost Optimization and Long-Term Strategy
This strategic move of acquiring and developing the Dugda Coal Washery positions JSW Steel to gain significant cost advantages over competitors who are still reliant on imported coking coal. By ensuring a steady and cheaper supply of high-quality domestic coal, JSW Steel can improve its cost competitiveness, which is crucial in the highly competitive global steel market.
Moreover, this decision will support the company’s long-term sustainability efforts. As energy and raw material costs are key drivers in steel production, securing a domestic coking coal supply and controlling the quality of the material through washery operations will help JSW Steel reduce its exposure to external market fluctuations and safeguard profitability in the long run.
The move also aligns with JSW Steel’s broader sustainability goals, as reducing dependence on imported coal lowers the carbon footprint associated with coal transportation. Additionally, the efficient use of washery byproducts and energy optimization will contribute to a more environmentally responsible production process.
Key Takeaways:
• JSW Steel has been appointed as the successful bidder for the Dugda Coal Washery project, located in Bokaro District, Jharkhand, for a 25-year period.
• The Washery will have the capacity to process 2 million metric tons per annum (MTPA) of raw coking coal, providing JSW Steel with a firm linkage for supply.
• The coal will be supplied at a premium of 2.35% over the notified price by BCCL, ensuring competitive pricing.
• JSW Steel will have the right to the washery product, which will contribute to cost optimization and operational efficiency.
• The company’s subsidiary JSW Energy (Utkal) Limited will consume the byproducts from the washery, which will be sold at market-linked prices, enhancing profitability.
• The Dugda Coal Washery acquisition aligns with JSW Steel's strategy of securing domestic coking coal to optimize raw material costs and reduce reliance on imported coal.
• This project is part of JSW Steel’s broader efforts to strengthen raw material security, support sustainable steel production, and improve cost competitiveness in the global market.
• The development of this washery will help JSW Steel optimize the use of byproducts and reduce carbon footprint in its steelmaking operations.
