By NIRMALYA DEB & ABHISHEK RAI

2 MnT of coking coal earmarked for sector in tranche V of linkage auctions

A report compiled by Fitch Solutions Macro Research predicts that India will overtake China as the largest importer of coking coal by 2025.
India’s coking coal consumption has been estimated to grow at an annual average rate of 5.4% between 2019 and 2028, “driven by an equally robust expansion in steel production in the country”, the report notes.
According to the report, India may overtake China as the largest importer of global coking coal by 2025, despite only importing half as much as China in 2017.
While China will remain dominant in terms of overall market share, India will become increasingly important in terms of seaborne demand, the report adds.

In a written reply to the Rajya Sabha recently Coal Minister Pralhad Joshi said that “the entire demand for coking coal is not met from domestic production as the supply of high quality coal/coking coal (low-ash coal) in the country is limited and thus no option is left but to resort to import of coking coal.”
The country has imported 51.84 million tonnes (MnT) of coking coal in financial year 2018-19 (FY9) – a rise of 10.3% during the fiscal – and government policy is geared towards “reduction in import of coal” which is a “priority area for the government”, the minister notes.

India’s coking coal reserves have been stagnant over the years. The vulnerability of the steel sector springs from the low availability and poor quality of the material in the domestic market. India’s total coal reserves have shown an increase of about 7 billion tonnes (BnT) during 2014-16, but there has hardly been any addition to coking coal reserves. Prime coking reserves stand at 5.313 BnT and proven prime coking coal reserves are around 4.614 BnT.

Imports Spiral

Data published by the Ministry of Coal (MoC) show that coking coal imports have climbed steadily since 2014-15, when these were at 43.72 MnT, to 47 MnT in 2017-18. Imports peaked to 54.84 MnT in 2018-19. The National Steel Policy forecasts coking coal demand to spiral to 161 MnT per annum by 2030-31. Demand for non-coking coal for pulverised coal injection (PCI) will touch 31 MnTPA and an additional 105 MnTPA of non-coking coal will be required for the direct reduced iron (DRI) route.
Only around 35% of the total requirement of 161 MnTPA of coking coal, which is about 56.35 MnTPA, can be reached domestically by 2030-31, when India is supposed to touch an overall crude steel production of 300 MnT. Joshi has cited this is a major challenge for coal and steel producers. Overall, coal and coke imports during the first half of the current fiscal rose by 13.9% to 119.42 MnT, compared to 104.81 MnT in the same period last year.

Steel: The Priority Sector

State-owned Coal India Ltd (CIL) has planned to increase coking coal output from 34.12 MnT at present to 52.95 MnT by 2019-20. CIL also plans to set up nine new coking coal washeries by 2020-21. “Supply of washed coking coal to the steel sector will be enhanced to 15 MT in 3-4 years from the present level of 1.6 MT,” Joshi recently assured.
Satyendra Nath Tiwari, who took over as Director (Marketing) of CIL since December 1, 2019, assured consumers during a pre-auctions conference held at Coal Bhawan in Kolkata recently that the steel sector remains the government’s and CIL’s top priority and 2 MnT of coking coal have been earmarked for the sector in tranche five of CIL’s ongoing linkage auctions. This is over and above the 2.5 MnT of coking coal being put to auctions for other coke users – especially hard and soft coke manufacturers and others from the non-regulated sector. Easing the supply concerns of the non-regulated sector, Tiwari says, forms a central plank of CIL’s policy revolving around the ongoing auctions.
The total volume of coal – both coking and non-coking – auctioned in the preceding four tranches of the linkage auctions was at 80.5 MnT and tranche V has another 15-20 MnT for the taking.