InvestorQ : Is it true that India proposes to procure coal from Russia now?
Mitali Bhutta made post

Is it true that India proposes to procure coal from Russia now?

2 years ago

Even as India struggles with coal supplies and steep global prices, there is only one out-of-the box approach to bridging the gap. It is to look for new sources of coal supply. That is exactly what India has done by opening the door for cooperation with Russia. The Steel Ministry has signed a memorandum of understanding or MOU with Russia for collaboration in mining and steel, with special focus on coking coal.

With the coal shortage getting more acute in India, Coal India has been prioritizing the thermal power sector with the result that some of the coal-intensive sectors like steel and aluminium are forced to fend for themselves. However, under the National Steel Policy, the target of 300 MTPA steel production by 2030 is non-negotiable. Hence backward integration is the only answer. The MOU envisages joint projects in coking coal with Russia.

While coking coal and thermal coal do not overlap, the ideas is to diversify sources since India spends Rs.75,000 crore yearly to import coking coal. While India predominantly imports coking coal, Tata Steel and SAIL rely predominantly on captive coking coal production. Currently, in the per unit cost of steel production, nearly 40% is accounted for by coking coal. A cheaper alternate source would be in its long term interests.