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Sources say that India's JSW Steel has difficulties importing coal from Mongolia.

Three sources with knowledge of the situation said that JSW Steel, India’s largest steelmaker in terms of capacity, had hit a roadblock when sourcing coal from Mongolia because suppliers were unresponsive and there was a bottleneck on transport.

The company had planned to import 2,500 tons of steel from Mongolia while the Steel Authority of India hoped to import 75,000 tons.

India, which is the second largest producer of crude iron and steel in the world, imports 85% of coking coal, with Australia providing more than half. The country's steel demand has soared due to rapid economic growth and increased infrastructure spending.

India is exploring partnership opportunities with Mongolia to diversify the supply chain of coking coal, a key ingredient in steelmaking. Industry officials identified Mongolia as a source for high-grade coal at lower prices.

One source, who declined to be named due to the sensitive nature the discussions, said: "There has been no response from Mongolian side and we find it difficult."

The source stated that "on the one hand, the transport from Russia has become backed up and on the opposite, it might not be possible to get the product from China in a sustainable manner."

Sandeep Poundrik, the Steel Secretary, said that sourcing materials from Mongolia was difficult due to its landlocked status.

JSW Steel and the Mongolian Prime Minister's Office did not reply to requests for comment.

Since the clash of troops in 2020 along their Himalayan borders, where at least 20 Indian and four Chinese soldiers were killed, relations between India and China have deteriorated.

There have been signs of thawing, with neighbours agreeing to resolve their trade and economic disputes in January.

Source: JSW Steel does not plan to increase its imports of coking coal from Russia.

They said, "We do not want to increase our exposure in a single geography."

The company sources its coking coal also from Australia, United States of America and Mozambique.

Last week, Chief Executive Jayant Acharya said that JSW Steel would consider buying assets of coking coal based on their commercial and strategic viability.

The steel secretary stated last week that India's imports of coking coal will increase due to the limited supply of this key ingredient in steelmaking, as the country ramps up its steel production capacity. (Reporting and editing by Saad Saeed; Neha Arora)

(source: Reuters)