India interested to import 40 MT of coal from Russia

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New Delhi: Amid the reports of India’s coal imports registering a significant drop in the April-June period, the Russian government confirmed that New Delhi has shown interest in importing up to 40 million tonnes (MT) of coal from Moscow. The statement from Moscow comes after reports indicated a fall of 29.7 percent to 48.84 million tonnes (MT) in the country’s coal imports. New Delhi had imported 69.54 MT of coal in the April-June period of 2019-20.

According to Russian Deputy Energy Minister Anatoly Yanovsky, India is keen to import coking coal, anthracite, and pulverized coal fuel per year from Moscow. Yanovsky’s statement came on sidelines of negotiations between Moscow and India’s Ministry of Steel on the large-scale import.

Statistics from the Russian Energy Ministry reflected that such volumes could be shipped and would be very competitive with coal from Australia, although this will require government subsidies for the project of Michel Litvak’s OTEKO in Timan in order to reduce coal handling costs. “This will make it possible to ship at least an additional 20 million tonnes of coal in 2020 already, foremost from the Kuznetsk Basin and Novosibirsk Region,” Yanovsky was quoted by local media.

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Russian officials hinted that India has big plans to ramp up steel production, but it does not have its own metallurgical coal. “Indian companies are actively holding negotiations on supplies of Russian coal and are looking for projects they could join, but they haven’t found attractive ones yet,” a senior official said while adding that New Delhi will overtake Beijing to become the world’s largest consumer of coking coal by 2025.

Negotiations between Russia and India on increasing exports and joint implementation of coal projects were held throughout 2019. Russia had sent trial batches of coal to India. It was reported in June that the world’s leading steel company, ArcelorMittal, as well as the Steel Authority of India Limited and Torrent Power, are holding negotiations on the part of India.

In October 2019, Indian Natural Gas Minister Dharmendra Pradhan estimated the country’s coking coal needs at 70 million tonnes, including 55 million tonnes for the steel industry alone. “We have plans to increase steel production to 3 million tonnes per year by 2030, so it will need to increase coal supplies for the national steel industry,” Pradhan said.

However, shipping Russian coal to India through ports in the far-East is $5-$7/tonne less profitable than shipping it to China. Russian coal companies have been traditionally catering to Japan, China, and South Korea. India’s interest to buy Russian coal has generated interest, but most Moscow companies consider New Delhi as a lower margin destination.