India is in discussions with Mongolia regarding a preliminary pact that would focus on mineral shipments between the two countries, an Indian Government source with knowledge of the matter said on Thursday.
The source told Reuters news agency the pact would include the transit of coal and copper.
It comes at a time when a number of domestic steelmakers, such as JSW Steel (BSE:500228) and the Steel Authority of India (SAIL) (BSE:500113), are also contemplating the importation of coking coal, an important ingredient in steel production.
JSW Steel — India’s biggest steelmaker by capacity — plans to buy 2,500 tonnes of coking coal from Mongolia, while SAIL intends to import 75,000 tonnes. Both would likely make their purchases via Russia or China.
India is currently the world’s second-largest manufacturer of crude steel, and meets 85% of its coking coal requirements by way of imports. Last year, erratic weather conditions hit supplies from Australia, which accounts for more than half of India’s imports — roughly 70 million tonnes a year. Since then, steel mills in India have been seeking coking coal from other countries.
According to industry officials, landlocked but resource-rich Mongolia can supply superior grades of coking coal to India at relatively lower prices — roughly US$50 ($77) cheaper per tonne than Australian supplies.
In addition to the potential pact between India and Mongolia, Reuters’ government source noted that India is exploring for lithium in the Himalayan region of Jammu and Kashmir, auctions for which are expected to take place in two months. A number of critical mineral auctions have already been launched as the Indian Government seeks cleaner energy alternatives to combat its dire pollution issues.
Several incentives have also been offered, including funding for research institutes to provide technical assistance to miners.
Beyond its borders, India is also exploring for critical minerals in Russia, Mongolia, Chile, and Zambia.
Write to Oliver Gray at Mining.com.au
Images: iStock
