Power, coal and mines minister Piyush Goyal said on Friday the government will improve the availability of coking coal used in steel plants by processing higher grade coal from domestic mines, which will help cut imports.
Goyal said washing higher- grade coal from domestic mines could make an additional 20 million tonnes of coking coal available for steel plants within the next three to four years.
Coking coal accounts for a fifth of the cost of making steel and has a direct impact on the price of steel.
It fetched $85 a tonne in global markets last August, and surged to $300 by November as China cut the number of days miners could work in a year, but has recently softened to nearly $150 a tonne. India imported over 43 million tonnes of coking coal in calender year 2015, accounting for two-thirds of domestic consumption by steel producers.
“I am given to understand there are certain grades of coal, which if washed, can be upgraded to coking coal. Coal secretary (Susheel Kumar) has been advised to work with coal companies,” said Goyal.
The minister said that using such high-grade coking coal in power plants was not an efficient way of using the resource. He said power plants will be allocated other grades of coal.
Due to the limited availability of coking coal in India, about 80% of the requirement of state-owned Steel Authority of India Ltd is met through imports.
The minister also said state-owned Coal India Ltd. will consider acquiring coking coal mines abroad if it gets a good deal.
The government has, over the last several months, rationalized the allocation and utilization of thermal coal by power plants aimed at reducing transportation costs for power generation companies. In December it decided to allow state-owned and private power producers to swap their allocations of coal so that power plants can source the fuel from the closest available location and improve power generation efficiency.
Goyal said the government is now in the process of allocating coal mines or linkages to power plants such as NTPC Ltd’s 4 gigawatt Pudimadaka plant, originally conceived to run on imported coal. The minister said that with a vast reserve of coal, power plants need not work on imported coal.