The Union Ministry of Steel has instructed central public sector enterprises (CPSEs) Steel Authority of India Limited (SAIL) and NMDC Limited to aggressively scout and acquire mineral assets abroad. The strategic directive aims to insulate India’s fast-expanding secondary and primary metals industry from overseas supply disruptions, elevated import freight rates, and international commodity price spikes.
The policy push arrives as India consolidates its position as the world’s second-largest crude steel producer. Under the central government’s National Steel Policy, domestic production capacity is slated to climb to 300 million tonnes per annum by 2030–31 to feed nationwide infrastructure, automotive, defense, and urban real estate programs.
However, achieving this production volume requires massive raw material inputs. While India possesses substantial domestic reserves of thermal coal and medium-to-low-grade iron ore, it faces an acute geological shortage of low-ash, high-grade metallurgical coking coal—the primary reducing agent required in basic oxygen blast furnaces.
The Coking Coal Chokepoint: Why Domestic Mills Are Exposed
India’s primary steelmakers operate largely on the Blast Furnace-Basic Oxygen Furnace (BF-BOF) route, which accounts for over 55% of national crude steel output.
[ INDIA'S COKING COAL SUPPLY DEPENDENCE ]
DOMESTIC CONSUMPTION PROFILE OVERSEAS SUPPLY RISK
────────────────────────────────────── ──────────────────────────────────────
• Annual Coking Coal Demand: ~65–70 MT • Australia (~50%–60% of total imports)
• Domestic Supply Share: Only 10%–15% • United States & Canada (~15%–20%)
• Import Dependence: Over 85% • Russia & Indonesia (~10%–15%)
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[ VULNERABILITY: EXPOSURE TO CYCLONES, EXPORT TARIFFS, & FREIGHT SHOCKS ]
The Sourcing Reality
To produce one tonne of crude steel via the blast furnace route, a mill requires approximately 0.75 to 0.8 tonnes of metallurgical coking coal. Because domestic reserves in the Jharia and Raniganj belts have high ash content (frequently exceeding 25%–30%), blending them with imported low-ash coking coal is technically necessary to prevent furnace choking and maintain operational thermal efficiency.
As international premium hard coking coal (PHCC) prices fluctuate between $220 and $350 per tonne due to weather disruptions in Queensland, rail bottlenecks, and currency shifts, Indian mills face volatile input costs. Acquiring direct equity ownership in operating overseas coal mines offers domestic steelmakers captive offtake security, anchoring input costs to baseline extraction expenses rather than spot-market pricing.
Mandate Division: How SAIL and NMDC Will Deploy Capital
The Ministry of Steel has structured the overseas mandate across the complementary strengths of the two state-run enterprises:
+─────────────────────────────────+─────────────────────────────────+─────────────────────────────────+
| Public Sector Enterprise | Primary Asset Focus | Geographic & Structural Strategy|
+─────────────────────────────────+─────────────────────────────────+─────────────────────────────────+
| Steel Authority of India Ltd | Premium Hard Coking Coal, | Consortia, equity joint ventures|
| (SAIL) | Pulverized Coal Injection (PCI) | via ICVL in Africa (Mozambique),|
| | coal for captive blast furnaces | North America, and Australia. |
+─────────────────────────────────+─────────────────────────────────+─────────────────────────────────+
| NMDC Limited | High-Grade Magnetite/Hematite | Commercial mining concessions, |
| | Iron Ore, Lithium, Cobalt, | equity stakes in Australia |
| | Nickel, and Battery Minerals | (Legacy Iron Ore), and Africa. |
+─────────────────────────────────+─────────────────────────────────+─────────────────────────────────+
1. SAIL’s Captive Fuel Strategy
As the country’s largest state-owned primary steelmaker, SAIL operates five integrated steel plants in Bhilai, Rourkela, Bokaro, Durgapur, and Burnpur. The company is actively executing an expansion program to increase its crude steel capacity from roughly 20 MT to over 35 MT.
To fuel this expansion, the ministry has encouraged SAIL to explore equity partnerships and long-term asset acquisitions, both independently and through International Coal Ventures Private Limited (ICVL)—a joint venture company originally formed by SAIL, NMDC, RINL, NTPC, and Coal India to acquire overseas coal assets like the Benga mine in Mozambique.
2. NMDC’s Mineral Diversification
NMDC, the nation’s largest iron ore miner, produces over 45 MT of iron ore annually from its mechanized mine complexes in Chhattisgarh’s Bailadila sector and Karnataka’s Donimalai belt.
While NMDC satisfies a substantial portion of domestic iron ore demand, the Ministry has directed it to:
- Scout high-grade overseas magnetite deposits suitable for direct-reduced iron (DRI) and green hydrogen-based steelmaking.
- Expand exploration for critical and strategic transition minerals (lithium, cobalt, and rare earth elements) through its overseas subsidiaries, such as Australia-based Legacy Iron Ore Ltd, in alignment with the National Critical Mineral Mission.
Global Sourcing Geographies Under Evaluation
The overseas asset scouting drive is targeting established mining jurisdictions characterized by stable regulatory regimes and verified resource quality:
[ GLOBAL RESOURCE CORRIDORS ]
AUSTRALIA & OCEANIA AFRICAN CONTINENT SOUTH AMERICA
─────────────────────── ─────────────────────── ───────────────────────
• Premium coking coal basins • Coking coal deposits in • Lithium and copper assets
in Queensland & New South Mozambique & South Africa. across the "Lithium Triangle"
Wales. • Untapped high-grade iron (Chile, Argentina).
• Critical mineral exploration ore belts in West Africa • High-grade iron ore reserves
assets for battery tech. (Guinea / Gabon). in Brazil.
- Australia: Remains the primary target for metallurgical coal assets and lithium exploration. NMDC’s existing operational footprint via Legacy Iron Ore provides an established legal and operational beachhead for participating in commercial concession biddings in Western Australia.
- Mozambique & Southern Africa: The Moatize basin in Mozambique represents a proven source of metallurgical coal. Expanding production capacity and optimizing freight logistics along the Beira and Nacala rail corridors could significantly increase coal flows to eastern Indian ports like Paradip, Vizag, and Haldia.
- South America: Argentina and Chile offer strategic avenues for securing critical green-transition minerals, aligning with bilateral initiatives spearheaded by Khanij Bidesh India Limited (KABIL).
Industrial Multipliers and Structural Uncertainties
While securing foreign mineral assets is essential for long-term industrial autonomy, the strategy involves notable operational and geopolitical risks:
- Sovereign and Geopolitical Risk: Past outbound mining investments by Indian public sector firms have faced bureaucratic delays, shifting tax regimes, and infrastructure bottlenecks in host developing nations, particularly regarding freight rail connectivity to evacuation ports.
- Capital Allocation Discipline: Global mining assets command high valuation premiums. SAIL and NMDC must balance outbound capital expenditures against ongoing domestic plant modernization and greenfield expansion budgets.
- Transition to Green Steelmaking: Over a 15-to-20-year horizon, global decarbonization mandates may shift steelmaking away from traditional blast furnaces toward green-hydrogen direct reduced iron (H2-DRI) and electric arc furnaces (EAF). Outbound investments in coking coal must be calibrated to ensure assets do not become stranded as alternative metallurgical technologies mature.
What Happens Next: Implementation Milestones
Following the Ministry’s directive, the state-run entities are moving toward formal asset assessment:
- Technical Due Diligence Desks: SAIL and NMDC will establish dedicated overseas investment cells to evaluate preliminary proposals submitted by global investment banks, mining juniors, and foreign concession owners.
- ICVL Operational Review: The Ministry of Steel will review the governance and equity structure of ICVL to determine whether to recapitalize the vehicle for multi-billion-dollar coal asset bids.
- Inter-Ministerial Alignment: The Ministry will coordinate with the Ministry of External Affairs and Ministry of Mines to leverage government-to-government (G2G) frameworks, ensuring that Indian public sector investments receive sovereign protections in target jurisdictions.
Frequently Asked Questions
Why did the Ministry of Steel ask SAIL and NMDC to explore overseas assets?
The Ministry directed SAIL and NMDC to acquire overseas mining assets to secure raw materials—primarily coking coal and high-grade iron ore—needed to support India’s planned expansion to 300 million tonnes of crude steel capacity by 2030–31, reducing vulnerability to global supply shocks.
Why does India need to import coking coal?
India lacks sufficient domestic reserves of high-quality, low-ash coking coal required for blast furnace steelmaking. Over 85% of India’s coking coal is imported, mainly from Australia, the US, and Russia, making domestic steel manufacturers vulnerable to international price spikes.
What specific minerals are targeted?
The primary targets are premium hard coking coal and high-grade iron ore, alongside strategic transition minerals such as lithium, cobalt, and nickel required for modern manufacturing and energy storage.
What is ICVL?
International Coal Ventures Private Limited (ICVL) is a joint venture company formed by public sector enterprises including SAIL, NMDC, and RINL to acquire and operate overseas coal mines, such as the Benga coking coal mine in Mozambique.
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