KOLKATA (miningweekly.com) - The Indian government is likely to scrap import duties on coking coal when the 2018/19 National Budget is placed before Parliament on February 1.

The Steel Ministry has recommended to its counterparts in the Finance Ministry that import duties on coking coal should be reduced to nil from the current 2.5%.

This was in response to several representations received from various segments of the steel industry about India’s rising demand for coking coal and the country’s high import dependency for the critical steelmaking raw material.

According to steel industry estimates, Indian coking coal imports during 2017/18 were likely to exceed the 50-million-ton mark, up from 41.6-million tons shipped in the last fiscal year, despite high international prices.

Even with international coking coal prices forecast to remain above $200/t till March, Indian steel companies would be forced to increase imports owing to higher production by local steel mills and a shortage of domestic supplies of coking coal.

One of the reasons for the tightening of domestic coking coal supplies is the 17% fall in production from April to November 2017 reported by Bharat Coking Coal Limited (BCCL), a Coal India Limited (CIL) subsidiary and the sole local miner of coking coal, though exact volumes of coking coal mined during the period are not available.

Meanwhile, in the long term, to ease price pressures of imported coking coal on domestic steel producers, the Indian government has mooted a proposal to shift coking coal mining from the purview of the Coal Ministry to the Steel Ministry.

A section within the government pushing for such a shift in administrative control has argued that the cost of domestic mining and the production of coking coal was as high as the cost of imported coking coal; hence, domestic miners like CIL had little interest in increasing production.

With companies like government-owned Steel Authority of India Limited already looking into the mining of coking coal, shifting the responsibility for coking coal mining from the Coal Ministry to Steel Ministry would enable the latter to push steel companies to undertake coking coal mining to integrate their existing steelmaking operations with the production of coal.