Enhancing Domestic Coking Coal Production: A Strategic Move for India’s Steel Sector

Enhancing Domestic Coking Coal Production: A Strategic Move for India’s Steel Sector

Sub : Geo

Sec : Eco GEO

Why in News

The recent report by Niti Aayog emphasizes the need to boost domestic coking coal production in India to reduce heavy import dependence. The report suggests including coking coal in the list of critical minerals, given its significant role in steel production and infrastructure development. This move aligns with India’s long-term goal of achieving Net Zero by 2070.

Key Points:

• Coking coal is a vital raw material used in the steel industry, accounting for around 42% of the total production cost.
• Steel is crucial for infrastructure development and supports various downstream industries that are major employment generators in India.
• Despite holding substantial domestic reserves, India remains heavily reliant on coking coal imports.
• In the fiscal year 2023-24, India’s Integrated Steel Plants (ISPs) imported 58 million metric tonnes of coking coal.
• The import expenditure on coking coal reached nearly Rs 1.5 lakh crore during the same period.
• India has an 85% dependency on imported coking coal, significantly higher than the EU’s 62% dependency.
• Domestic Coking Coal Reserves: India possesses 13 billion tonnes of prime coking coal and 16.5 billion tonnes of medium coking coal.
• The report advocates for the efficient use of domestic reserves to reduce the country’s reliance on imports.

About Coking Coal:

• Top Suppliers: Australia (16 MT),Russia (4 MT), United States (4.3 MT)
• Coking coal is a type of coal that is important in making high-quality coke. It is also called metallurgical coal.
• This substance is an essential fuel and is useful as a reactant in the blast furnace process of primary steelmaking. Therefore, the demand for this type of coal is parallel to that of steel.
• Coking coal has a low ash content, low moisture content and low sulphur and phosphorous contents.
• We can categorize coking coal as a type of bituminous coal depending on the chemical composition.
• During the process of coking (production of coke from coking coal), the material tends to swell and its volume increases.
• The ability of coking coal to form coke relates to its physical properties such as the rank of coal. In contrast to coking coal, thermal coal cannot produce coke when the material is heated.

Recommendations by the Niti Aayog Report:

• The government is urged to categorize coking coal as a critical mineral, similar to the European Union’s inclusion of key materials like lithium, cobalt, and rare earths. This recognition would help prioritize domestic production, ensuring a secure supply for India’s steel industry.
• The report suggests providing special incentives to enhance local coking coal production. Increased domestic production could stabilize prices and provide a consistent supply of coking coal for the steel sector.
• The performance of Public Sector Undertaking (PSU) washeries is suboptimal, with a capacity utilization rate below 32%in FY 2022-23. In contrast, private washeries achieved a 75% capacity utilization and higher coal yields of 35-36%.
• The report recommends improving PSU washeries’ efficiency to match private sector standards.
• Amendment of the Coal Bearing Areas (CBA) Act, 1957: The report suggests changes to allow the Public-Private-Partnership (PPP) Special Purpose Vehicle (SPV)to maintain its status as a lessee even after the majority stake is transferred to the private sector.
• The Ministry of Coal is advised to make policy adjustments to allow joint venture companies to sell by products from washeries, such as middling and tailings.

About Critical minerals:

• Critical minerals refer to mineral resources, both primary and processed, which are essential inputs in the production process of an economy, and whose supplies are likely to be disrupted due to the risks of non-availability or unaffordable price spikes.
• To tackle such supply risks, major global economies periodically evaluate which minerals are critical for their jurisdiction through a quantitative assessment.
• Minerals such as antimony, cobalt, gallium, graphite, lithium, nickel, niobium, and strontium are among the 22 assessed to be critical for India.