ULAANBAATAR, Mongolia – Steel Authority of India (SAIL) has airlifted a 1-ton sample of coking coal from Mongolia for laboratory testing, marking the first trial shipment to evaluate the landlocked country as a potential raw material supplier.   

The trial comes as state-backed SAIL and other Indian steelmakers look to diversify raw material sourcing away from Australia, which currently supplies at least half of India's coking coal imports.   

Supply Chain Pressures and Lab Assessment

India, the world's second-largest crude steel producer, imports approximately 95 percent of its coking coal needs, a vital input accounting for nearly 40 percent of total steel production costs. According to industry reports, India's coking coal imports are projected to rise 3 to 5 percent in fiscal year 2026/27 from 64 million tons, driven by domestic capacity expansions.   

SAIL will conduct metallurgical laboratory tests on the 1-ton sample by state-owned Erdenes Tavan Tolgoi coking coal mining company to evaluate its technical suitability for steel manufacturing. Subsequent commercial procurement decisions will depend on the coal's performance in testing, along with final landed costs and logistical feasibility.   

Logistical and Transit Considerations

While metallurgical coal analysts note that Mongolian coking coal offers superior quality, transporting commercial volumes to Indian steel plants presents notable logistical hurdles.   

Because Mongolia is landlocked between Russia and China, long-term maritime transit would likely require utilizing a transit corridor through Russia to reach sea ports. Transportation along the longer Russian route is anticipated to incur higher freight costs compared to competing regional suppliers, placing landed cost and commercial viability at the center of future negotiations.   

Strategic Bilateral Framework

The testing initiative directly follows commitments established during the state visit by the President of Mongolia U.Khurelsukh to India in October 2025.   

During high-level bilateral talks with Indian Prime Minister N.Modi, both nations signed a Memorandum of Understanding on Cooperation in the Field of Geology and Mineral Resources between the Ministry of Industry and Mineral Resources of Mongolia and the Ministry of Mines of India. The joint statement affirmed plans to lay the groundwork for exporting key Mongolian mineral resources, including high-grade coking coal and copper, to the Indian market to support industrial growth and supply chain resilience.   

Source: https://www.reuters.com/