India, the world’s second-biggest crude steel producer, relies on imports for about 85% of its coking coal needs, with more than half sourced from Australia. Demand is expected to climb in coming years, prompting the government and steelmakers to look at tapping new suppliers, the source said.
Landlocked Mongolia has two trade corridors for exports – a longer route via Russia and another through China.
India does not expect the China route to be viable in the long term given Mongolia’s strategic importance to Beijing as a coal supplier and the potential for Beijing to block access, the source said, declining to be identified as the information was not public.
India’s Ministry of Steel did not respond to an email seeking comment.
New Delhi and Beijing are cautiously rebuilding economic ties after a deadly clash along their contested border in 2020 triggered a prolonged military standoff. Mongolian coking coal has been cited by industry officials as a potential source of high-grade coal at relatively lower prices. But logistics remain the biggest hurdle, the source said.India has yet to receive trial shipments of Mongolian coal that were planned earlier this year. State-run Steel Authority of India (SAIL) had sought 1 metric ton of Mongolian coal, Reuters reported in May.
“SAIL is in continuous engagement with Mongolian coking coal suppliers for ascertaining technical and logistical feasibility for sourcing from Mongolia,” the steelmaker said in an emailed statement.
The Mongolian Ministry of Mining and Heavy Industry did not respond to a request for comment.
Separately, Russia and the United States each account for roughly 15% of India’s coking coal imports, the source said.