India's coal crisis has forced local producers of sponge iron (Direct Reduced Iron, DRI) to scour the planet for fuel supplies to keep their plants running.
Jindal Steel & Power Ltd., which is running its sponge iron plants at 40% capacity due to fuel shortages, has secured contracts to supply 150,000 tons of thermal coal for May and June from South Africa and Mozambique.
“Coal is out of stock and we are currently in a difficult inventory situation,” the plant’s chief executive said in an interview with Bloomberg.
Asia's third-largest economy is grappling with an energy crisis that threatens to hit industrial production as state giant Coal India Ltd. sends most of its production to power plants to maintain power supply in the face of increasing blackouts.
In the central state of Chhattisgarh, a center of iron ore and steel production, sponge iron producers are operating at about 60% of their normal levels and could be forced to shut down completely if they can't get more coal.
The situation with coal in India is very bad, as stocks are depleted and the availability of rail cars to transport material is becoming increasingly difficult. Mills are willing to pay higher premiums for coal in e-auctions as "they are desperate to get their mills up and running" as companies don't want to miss out on growing export demand for steel.
India's steel exports jumped 25% to 13.5 million tons in the fiscal year ending March, according to government data.
Earlier reported that Indian steelmaker Tata Steel announced it was phasing out Russian coal due to the impact of Western sanctions on its supply and payment chains.
