India May Tap Poland for Coking Coal to Ease Australia’s Hold

India, which buys almost three-quarters of its imported coking coal from Australia, is considering turning to Poland to guard against price increases.

Talks are at an early stage and a decision will be based on prices offered, federal steel secretary G. Mohan Kumar said on Feb. 11, ahead of meetings with a delegation from the European nation. India may also seek deep mining equipment from Poland to boost production in its underground coal mines, said Katarzyna Kacperczyk, under-secretary of state at Poland’s foreign affairs ministry.

“We’re willing to consider Poland as an option,” Mohan Kumar said in the interview in New Delhi. “European costs are high because of environmental issues. So, the price will have to be right.”

Over-dependence on Australia has left Indian steelmakers exposed to price spurts in the world’s biggest producing nation. Mills, including Steel Authority of India Ltd. and Rashtriya Ispat Nigam Ltd., are switching to suppliers in countries including the U.S. and Canada for coal to fire their blast furnaces.

“We see India as a big market for our coking coal and coke and also for our deep mining equipment, which can help mitigate risks of accidents in Indian mines,” Kacperczyk said in a Feb. 11 interview in New Delhi. “We don’t want to just sell our coal and machinery and leave. We are looking for an enduring partnership.”

Coal India Ltd. (COAL), the world’s biggest producer and supplier of 80 percent of India’s output, gets about 8 percent of its production from underground mines. As reserves on the surface deplete, the company must tap deeper deposits to meet demand from power stations, steel mills and cement companies.

Poland has no immediate plans to sell stakes in its coal mines, Kacperczyk said, dispelling a Jan. 19 Press Trust of India report that a consortium of Indian state-run companies led by Steel Authority of India was in acquisition talks.

Poland is Europe’s largest producer of power-station coal with 16.9 billion metric tons of reserves, according to the European Association for Coal and Lignite. Steam coal comprises 56 percent of the mineable reserves, while the balance is coking coal, used in steelmaking, according to the association.

To contact the reporter on this story: Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.