Steel Authority of India (SAIL) has airlifted a 1 t coking coal sample from Mongolia for the first time, testing the landlocked country as a potential supplier as India seeks to diversify imports and reduce dependence on Australia. The state-backed steelmaker flew in the sample earlier this month and will assess whether it meets the requirements of its steelmaking operations.

SAIL had planned the trial last year as India’s steelmakers faced rising import needs and logistical constraints. India, the world’s second-largest crude steel producer after China, imports about 95 per cent of its coking coal requirements, with Australia accounting for at least half of those supplies. Coking coal represents nearly 40 per cent of steel production costs.

The trial is focused primarily on supply diversification, although transporting coal from Mongolia to India presents significant challenges. Mongolia is located between Russia and China, and strained relations between New Delhi and Beijing mean India would probably have to rely on a longer route through Russia. Indian authorities have previously indicated a preference for the Russian route because of strategic concerns involving China.

SAIL will decide whether to pursue long-term supplies after evaluating the coal’s suitability, as well as the cost and feasibility of transportation. Shipping through Russia would make Mongolian coal considerably more expensive than competing supplies, although an analyst assessed its quality as superior. SAIL and Mongolia’s Ministry of Mining and Heavy Industry did not respond to requests for comment.

India and Mongolia agreed last year to work towards securing coking coal and copper supplies for Indian companies. India’s coking coal imports are forecast to rise by 3 to 5 per cent in 2026/27 from 64 mn t a year earlier, according to commodities consultancy BigMint, because domestic coal does not fully meet steelmakers’ requirements. Australia is expected to remain the largest supplier, while imports from Russia, Mozambique and the US are also forecast to increase as India expands steel production and places greater pressure on global supplies.