Coal India (CIL) has signed a memorandum of understanding with ArcelorMittal Nippon Steel India (AMNS) to explore use of synthesis gas from a proposed coal gasification plant near the Paradip pellet plant in Odisha. The MoU envisages CIL establishing a gasification facility adjacent to or at the Paradip pellet plant with carbon capture, utilisation and storage technology. The parties will assess technical and commercial feasibility and prepare a preliminary feasibility report to evaluate viability.

Coal gasification converts coal into synthesis gas used by steelmakers as a cleaner fuel and chemical reducing agent, substituting for imported natural gas and reducing reliance on imported coking coal. CIL accounts for over 80 per cent of domestic coal output. The Union Cabinet has approved a Rs 375 billion (bn) incentive scheme for surface coal and lignite gasification to boost clean energy production and cut dependence on imports of LNG, urea and methanol.

The scheme, approved under the chairmanship of Prime Minister Narendra Modi, supports a national target of gasifying 100 million (mn) tonnes (t) of coal by 2030 to strengthen energy security and reduce exposure to global price volatility. India holds one of the world’s largest coal reserves, at 401 bn tonnes (t), and coal provides over 55 per cent of the energy mix. The companies will examine implementation modalities and possible timelines as part of preparatory work.

The collaboration is an initial step to assess deployment at scale of synthesis gas and carbon capture technologies near steelmaking facilities, including commercial offtake arrangements and technical integration. The preliminary feasibility report will determine whether the project moves to detailed engineering and investment decisions, and the assessment will consider environmental and logistical factors. A successful demonstration could reduce foreign exchange outflows linked to energy and feedstock imports and support cleaner industrial fuel supply chains.