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JSW targets Mongolian coal to diversify sources.
Logistical challenges may impede imports.
Shift looks to reduce Australia dependence.
JSW Steel, India's top steel maker, is aggressively studying the potential to source coking coal from Mongolia with the goal of reducing its raw material dependence and ensuring long-term supply security. The move follows steelmakers around the world in looking for alternatives in the face of fluctuations in coal prices and disruptions in trade.
Coking coal, a key input in steel making, is imported by Indian firms primarily from Australia. JSW Steel's decision to explore Mongolian coal is part of its plan to de-risk procurement and better control costs. Industry experts point out, though, that connectivity issues, non-availability of direct transport links, and cross-border trade restrictions between India and Mongolia continue to remain major hindrances.
Even with these operational challenges, the firm considers Mongolian coal a strategic opportunity because of its pricing advantage and quality. JSW Steel is said to be negotiating with suppliers and logistic partners to overcome the connectivity and infrastructure challenges.
If it materializes, the move may decouple India from its overreliance on Australian coking coal, make JSW's procurement base more diversified, and possibly bring down the cost of inputs into steel making.
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