Exploration of coking coal resources underway in Indonesia and Australia, as per NMDC chairman's statements
MUMBAI: Indian miner, NMDC, is diving headfirst into the world of coking coal, a crucial ingredient for making iron ore and steel, by scoping out assets in Indonesia and Australia, according to Chairman Amitava Mukherjee.
India, the world's coveted second-largest producer of crude steel, relies on imports for a staggering 85% of its coking coal requirements. Australia serves as the biggest supplier, accounting for more than half of the country's coking coal imports.
NMDC views this exploration spree as an appealing business opportunity, according to Mukherjee. He shared, "The negotiations are in different stages." Alas, he reluctantly kept the fine details under wraps, courtesy of confidentiality clauses.
State-owned NMDC is India's reigning iron ore king, with operations sprawling across the nation in four mines.
JSW Steel's CEO, Jayant Acharya, earlier in the day dished that the company sourced coking coal from Australia, the United States, and Mozambique, while SAIL hails coking coal from countries like Mongolia.
Coking coal has been a notoriously volatile commodity due to its dominance in exports and the whims of Mother Nature, according to commodity consultancy firm BigMint. Adverse weather conditions throttled coking coal supplies from Australia in 2023.
Here's the lowdown on NMDC's move:
- Negotiations Natty: NMDC is chatting up coking coal mines in both countries, hoping to lower import dependence and strengthen supply chains. Details about these chats are under wraps due to confidentiality clauses, but they're focusing on quality geology and operational sustainability.
- Steelmakers Sneaky Shift: This is a significant shift for NMDC, which has primarily dealt with iron ore. It's emulating Indian steelmakers like JSW Steel (which sources coking coal from Australia, the U.S., and Mozambique) and SAIL (which hails coking coal from Mongolia), who are making a strategic jump into raw material production.
If NMDC succeeds in these acquisitions, it could:
- Supply Stability: Reduce the nation's vulnerability to supply disruptions, such as Australia's weather-related export volatility in 2023.
- Cost Consistency: Mitigate price fluctuations caused by global market dynamics and export dependency.
- Industry Expansion: Support India's goal to expand steel production capacity, crucial for infrastructure development and economic growth.
If these acquisitions bear fruit, NMDC could become a key player in India's steel supply chain while addressing long-term raw material security challenges. Boom! 💥🤑⚡️💫🔥🚀🚀
- NMDC, being the largest in India's iron ore industry, sees potential in coking coal production to meet the country's requirements, exploring assets in Indonesia and Australia.
- The negotiations for these potential acquisitions are currently confidential, but NMDC is focused on securing quality geology and operational sustainability.
- If successful, NMDC's acquisitions could provide stability in supply, mitigate costs due to market fluctuations, and support India's expansion in steel production, addressing long-term raw material security challenges.
- Similar to JSW Steel and SAIL, NMDC's strategic shift into coking coal production aims to strengthen supply chains and reduce import dependence in the coking coal industry.
