JSW Steel eyes Mongolia coking coal, cites logistics as key challenge

JSW Steel is keen to source coking coal from Mongolia but the company sees challenges from logistics point of view, a senior executive of the steel major said.

Mongolia has been on the company's radar for exploring as a supply partner, but there are logistical challenges because it is a landlocked country, Arun Maheshwari, Director (Commercial & Marketing), said during an investor call.

"As of now, we have not been able to take any quantity out of Mongolia," he said in reply to a question about sourcing coal from Mongolia.

He said the challenge remains even if transportation is explored via countries in the neighbourhood of Mongolia like Russia and China. 

 

"(Coking coal) ...coming via Russia ...it is already very congested, and taking route from China is also a logistical constraint as of today," Maheshwari said, adding the company will continue to explore Mongolia as a source.

"Our sourcing from Australia, Russia and US, Mozambique, Indonesia has been for long. So, it will continue," he added.

Coking coal is a key raw material needed for the manufacturing of steel through the blast furnace route.

The government has been in discussions with Mongolia to source coking coal from the landlocked nation.

The move aims at diversifying raw materials sourcing, and will not only increase the availability of the key steel-making material but also help in cost optimisation of producing the commodity. 

In January, a senior government official had told PTI that the government is examining the route for the import of coking coal from Mongolia.

India remains dependent on a select group of nations -- largely far located Australia -- to meet 80-90 per cent of its coking coal requirements.

Sourcing from distant locations takes months for cargo ships to transport the raw materials to India, adding to the overall production cost.