Coking Coal as Critical Mineral
Context:
The government should designate coking coal as a critical mineral and implement measures to boost its domestic production, according to a Niti Aayog report titled “Enhancing Domestic Coking Coal Availability to Reduce the Import of Coking Coal.”
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- The report emphasises the importance of utilising India’s significant reserves of medium-quality coking coal to support the steel industry while aligning with the country’s Net Zero commitments for 2070.
Coking Coal
Also known as metallurgical coal, it is a specific type of coal essential for the production of coke, which is a key ingredient in the steelmaking process. It is characterised by its ability to transform into coke when heated in the absence of oxygen. This type of coal is primarily composed of carbon and has low sulphur and ash content, making it suitable for metallurgical applications. High-quality coking coal typically contains about 90% carbon and minimal impurities, which enhances its performance in steel production.
Industrial Applications: Steel Production, Carbon Electrodes etc.
India’s Status
Quality Issues: Indian coking coal typically has a high ash content (ranging from 18% to 49%), making it unsuitable for direct use in blast furnaces without washing. To address this, Indian steel manufacturers blend domestic coking coal with imported varieties that have lower ash content (typically below 9%) to produce high-quality coke for steelmaking.
Government Initiatives: The Indian government launched the Mission Coking Coal in August 2021. This initiative aims to augment domestic production and utilisation of coking coal by 2030 through several strategies like Increasing exploration and production of coking coal, Enhancing washing capacities to improve coal quality and Auctioning new coking coal mines to boost supply.
The Case for Coking Coal as a Critical Mineral:
- Coking coal, a vital raw material for steel production, accounts for approximately 42% of the cost of steel.
- Steel is essential for infrastructure development and downstream industries, both of which are major job creators in India.
- The report highlighted that India’s dependency on imported coking coal stands at a staggering 85%, far exceeding the European Union’s 62% reliance.
- Australia remains the largest supplier, accounting for about 60% of these imports.
- The EU has already declared coking coal a critical raw material alongside 29 others, including lithium, cobalt, and rare earths, crucial for green energy.
Current State of Coking Coal in India:
- Despite India holding proven geological resources of 5.13 billion tonnes of prime coking coal and 16.5 billion tonnes of medium-quality reserves, the country imported 58 million metric tonnes of coking coal at a cost of approximately ₹1.5 lakh crore in FY 2023-24.
- The performance of public sector unit (PSU) washeries was notably poor, with capacity utilisation below 32% and washed coal yields of just 35-36% in FY 2022-23.
- In contrast, private washeries achieved a capacity utilisation rate of 75% or higher and delivered better yields.
Key Recommendations:
The report proposed several measures to enhance domestic coking coal availability:
- Amend the Coal Bearing Areas (CBA) Act, 1957: To enable public-private partnerships (PPP), the report suggests amending the CBA Act to allow the special purpose vehicle (SPV) under PPP arrangements to retain its status as a deemed lessee of the Jharkhand government even after transferring majority shares to private entities.
- Policy Changes for Byproduct Sales: The Ministry of Coal should allow joint venture companies to sell washeries’ byproducts (middling and tailing). Profits from these sales should reduce the costs of washing clean coal for steel plants.
- Improved Capacity Utilisation: Increasing the efficiency and capacity utilisation of PSU washeries is crucial to improve clean coal yields and reduce reliance on imports.
The report underscores that prioritising domestic coking coal production is vital for reducing import dependency, enhancing cost-efficiency in steel manufacturing, and supporting India’s broader economic and environmental goals.
