Diversifying Coal Usage and Reducing Import Dependence

The Ministry of Coal has made significant strides in its “Mission Coking Coal,” launched in August 2021, aimed at boosting domestic coking coal production and reducing import dependency, especially for the steel industry. The initiative has led to a notable increase in production, innovative partnerships with the private sector, and the establishment of new facilities. Recent developments highlight the government’s commitment to enhancing the domestic coking coal supply chain, which is crucial for India’s industrial growth.

Increased Domestic Production

Since the inception of Mission Coking Coal, India’s coking coal production has surged from 44.79 million tonnes (MT) in the fiscal year 2020-21 to an impressive 66.47 MT projected for 2024-25. This growth reflects the government’s efforts to bolster local production capabilities and lessen reliance on imports. The Coal India Limited (CIL) has also taken proactive measures by offering 11 previously discontinued coking coal mines under a new revenue-sharing model with private sector players. This innovative approach aims to attract investment and expertise, further enhancing production efficiency and output.

Additionally, the commissioning of the New Madhuband Coking Coal Washery by Bharat Coking Coal Limited (BCCL) in fiscal year 2023-24, with a capacity of 5 million tonnes per annum (MTPA), marks a significant milestone. This facility is expected to play a vital role in processing coking coal, thereby improving the quality and availability of domestic supplies. Furthermore, CIL has successfully monetized one coking coal washery, showcasing its commitment to optimizing resources and enhancing operational efficiency.

Policy Initiatives for Import Substitution

To further reduce dependence on coking coal imports, several policy initiatives have been introduced. The amendment to the Non-Regulated Sector (NRS) linkage auction policy, implemented in 2020, has extended the tenure of coking coal linkages to a maximum of 30 years. This long-term approach is anticipated to positively impact coal import substitution by providing stability and predictability for investors and producers.

In March 2024, a new sub-sector titled “Steel using Coking Coal through WDO route” was established under the NRS linkage auctions. This initiative aims to enhance domestic coking coal consumption and increase the availability of washed coking coal in the country. By fostering a more robust domestic market, the government seeks to further diminish the reliance on imported coking coal, thereby strengthening the overall steel production ecosystem in India.

Current Developments in Coking Coal Washeries

The establishment of new coking coal washeries is a critical component of the mission’s success. Several projects are currently underway, with varying capacities and timelines. For instance, the Bhojudih washery in West Bengal, with a capacity of 2.0 MTPA, is under construction and expected to be operational by fiscal year 2025-26. Similarly, the Patherdih II washery in Jharkhand, with a capacity of 2.5 MTPA, is also under construction, slated for completion by fiscal year 2026-27.

Other notable projects include the New Moonidih washery and New Kathara washery, both in Jharkhand, with capacities of 2.5 MTPA and 3.0 MTPA, respectively. The New Rajrappa washery, also in Jharkhand, is projected to have a capacity of 3.0 MTPA and is expected to be operational by fiscal year 2029-30. These developments underscore the government’s commitment to expanding domestic coking coal processing capabilities, which is essential for meeting the growing demands of the steel industry.

Transparent Coal Distribution Policies

The Ministry of Coal has implemented several policies to ensure transparent coal distribution. These include the New Coal Distribution Policy (NCDP), the Revised Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI), and the Linkage Auction Policy for the Non-Regulated Sector (NRS). Additionally, the Bridge Linkage Policy and Single Window Mode Agnostic Auctions have been introduced to streamline the allocation process.

Coal is supplied to consumers based on Fuel Supply Agreements between coal companies and their clients. These policies are regularly updated to adapt to changing market conditions and ensure fair distribution. The Union Minister of Coal and Mines, Shri G. Kishan Reddy, provided this information in a written response to the Rajya Sabha, highlighting the government’s ongoing efforts to enhance the coal sector’s efficiency and transparency.

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