JSW Steel which holds the title of India’s largest steelmaker by capacity faces major obstacles when trying to import coking coal from Mongolia. The company intended to import 2,500 metric tons of essential steelmaking material but encountered insurmountable problems with uncooperative Mongolian suppliers and transportation challenges. The supply chain obstacles prevent the company from achieving its goal of expanding its supply base beyond traditional partners Australia and Russia.
The second-largest crude steel producer in the world depends on imported coking coal for 85% of its total requirements. More than half of this comes from Australia. JSW Steel and other companies actively pursue new suppliers because steel demand is increasing because of economic growth and extensive infrastructure development. The promising low-cost opportunity in Mongolia turned out to be challenging because of diplomatic obstacles and transportation problems.
The Mongolian side has not provided any response according to a knowledgeable source while Russian transportation routes are fully occupied and Chinese imports remain uncertain because of political tensions.
Steel Secretary Sandeep Poundrik confirmed the difficulties of obtaining supplies from Mongolia because it is a landlocked country. JSW Steel maintains Russian coking coal imports at one-third of its total while avoiding Moscow because of its geographic risk management strategy. The company operates coal supply operations in Australia together with the U.S. and Mozambique.
JSW Steel CEO Jayant Acharya indicated that the company would pursue coking coal asset acquisitions if they match both strategic and financial objectives. The nationwide expansion of steel production makes India’s need for dependable and varied coking coal supply networks more critical than ever.
