Steel Authority of India Tested Mongolian Coking Coal
The pilot shipment highlights efforts by Indian steelmakers to diversify supply chains and hedge against reliance on Australian coal.
Updated on Sept. 30, 2026 in Oil and Gas
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In September 2026, the Steel Authority of India airlifted a 1-metric-ton sample of coking coal from Mongolia. The trial seeks to mitigate risks for a nation that currently imports approximately 95% of its coking coal needs.
Why it matters
Coking coal accounts for nearly 40% of steel production costs, making supply stability a critical driver of operating margins. Diversification is necessary as India's import demand is projected to grow by 3% to 5% in 2026/27.
India imports roughly 95% of its coking coal, with Australia historically providing at least 50% of that volume. As the sector faces rising import needs, operators must manage inputs that represent nearly 40% of total production costs.
The players
Steel Authority of India
A state-owned steel producer that manages significant manufacturing operations and is a major purchaser of metallurgical coal.
The details
The test shipment reflects a strategic pivot necessitated by the high cost of inputs and a desire for geographic supply diversity. Logistics remain complex, as any reliable supply chain from Mongolia would require transit through Russia to circumvent geopolitical constraints involving China. The company is now evaluating whether the coal meets the technical requirements of its manufacturing processes.
Timeline
2020: Deadly border clash between India and China occurred.
2025: India and Mongolia agreed to work toward securing coal and copper supplies.
September 2026: Steel Authority of India airlifted the coal sample.
2026/27: Projected increase in India's coking coal imports.
Market Landscape
The trial shipment follows the framework established by the 2025 India-Mongolia agreement on coal and copper supply security, which prioritized reducing dependence on traditional suppliers like Australia. This move marks an operational effort to secure inputs that are critical to mitigating the price volatility seen in the sector as recently as September 2026.
Operators should monitor whether this test leads to viable long-term logistics routes through Russia, as that would alter the competitive landscape for regional coal suppliers. Watch for quality assessment results, as these will determine if your own input cost projections for 2027 require adjustment.
The takeaway
Securing a reliable, diversified supply chain for raw materials is vital when inputs represent a major percentage of your production overhead. Track whether the Steel Authority of India successfully scales this route, as a successful implementation could signal a shift in global coal pricing benchmarks.
Further reading
For broader trends in raw material procurement, see Oil and Gas.
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Should the nation prioritize diversifying its industrial supply chains despite higher transport costs?
