NSteel Authority of India
(SAIL) has airlifted coking coal from Mongolia for the
first time, testing the landlocked nation as a potential new
supplier as India seeks to reduce its dependence on Australia,
two sources said.
The state-backed steelmaker flew in a 1-metric-ton sample
earlier this month and will assess whether the coal meets its
steelmaking requirements, the sources said, declining to be
identified because the development has not been made public.
SAIL, one of India’s largest steelmakers, planned the trial
last year, in a move first reported by Reuters.
India, the world’s second-largest crude steel producer after
China, imports about 95% of its coking coal needs, with
Australia supplying at least half. Coking coal accounts for
nearly 40% of steel production costs.
The trial is aimed primarily at diversifying supplies,
though transporting coal from Mongolia to India remains a major
challenge, the sources said.
Mongolia is landlocked between Russia and China, and
strained relations between New Delhi and Beijing mean India
would likely have to rely on a longer route through Russia.
Indian authorities have previously said they favour the
Russian route because of strategic concerns involving China.
Relations between India and China have remained tense since
a deadly clash along their disputed Himalayan border in 2020,
despite recent steps to improve ties, including the resumption
of direct flights and easier visa procedures for Chinese
professionals.
SAIL will decide whether to pursue long-term supplies from
Mongolia based on the suitability of the coal, and the cost and
feasibility of transporting it, the sources said.
Shipping the coal via Russia would make it significantly
more expensive than competing supplies, although its quality is
superior, a metallurgical coal analyst said.
SAIL and Mongolia’s Ministry of Mining and Heavy Industry
did not respond to requests for comment.
India and Mongolia agreed last year to work towards securing
coking coal and copper supplies for Indian companies.
India’s coking coal imports are expected to rise 3% to 5% in
2026/27 from 64 million tons a year earlier, commodities
consultancy BigMint has said, as domestic coal does not fully
meet steelmakers’ requirements.
Australia is expected to remain India’s largest supplier,
although imports from Russia, Mozambique and the US are also
forecast to increase, analysts said.
As India expands steel production, it will require
substantially more coking coal, most of which will need to be
imported, increasing pressure on global supplies.
Indian steelmakers have raised prices in recent weeks as
coking coal costs increased and domestic demand revived, Reuters
reported earlier this month.
Published on September 30, 2026
