How To Meet Coking Coal Challenges?

Union Steel Minister Chaudhary Birendra Singh recently said that producing quality steel could help India compete with China, even though the latter’s total production is around 8-9 times that of India’s.

- Madhumita Mookerji

India, on its part, aims to produce 300 million tons (mt) of crude steel by 2030-2031. This means the crude output will have to be hiked 130 percent from the current capacity of around 135 mt. And since India’s present per capita steel consumption is at a mere 68 kg compared to the world’s average of 208 kg, industry experts implicitly believe that there is ample room for growth in steel consumption in India which is now the third-largest steel producer in the world after China and Japan.

While all that sound positive, there is a lurking sense of danger. As the country looks to increase crude steel production capacity and per capital steel consumption, this also indicates greater demand for coking coal, a key but scarce raw material, indeed! India does not exactly have large swathes of coking coal reserves and hence is dependent mainly on imports, a scenario that is not likely to change going into the future. “Not only is coal expensive, supply is also falling short and we need to work out some alternatives,” Chaudhary Birendra Singh sounded a note of caution at a recently-concluded Indian Steel Association (ISA) conclave held in New Delhi.

According to S&P Analytics, India’s coking coal, also known as metallurgical coal, demand is estimated to hit 70 mt by 2020. This would mark a 25 percent increase, or an increment of 5 mt per annum, in demand from the 2017 levels. Monthly metallurgical coal demand is, therefore, forecasted to trend higher towards 6 mt at the end of 2020.

India’s crude steel production was at 102.33 mt with a capacity of 138 mt in financial year 2017-18.

However, Coal India Limited’s (CIL’s) met coal production in 2016-17 was at 54.65 mt and markedly down by 39 percent at 33.28 mt in 2017-18. Over April-August, 2018, coking coal production from CIL was at 12.38 mt against 12.04 mt in the same five months in the previous fiscal, up a meagre 3 percent.