Coal India Ltd. has taken a major step in moving away from its traditional focus, securing a 288 million-ton iron ore reserve in Odisha state. As the primary coal supplier in India, the state-run company is shifting its focus to the growing steel industry while aiming to reduce its fossil fuel dependence.
The Gadadharpur block, located in eastern India, marks a pivotal shift for the company. While coal continues to make up 74% of India’s production, this share has decreased by 10 percentage points in recent years, partly due to the expansion of renewable energy. 'The potential for coal growth is shrinking,' observed Rupesh Sankhe of Elara Capital India Pvt.
India's steel industry is aiming to more than double its production capacity to 500 million tons by 2047, as reported by the government. This growth has led to a surge in demand for iron ore, with projections from Wood Mackenzie estimating imports could rise fourfold to 40 million tons by 2035.
Coal India is already expanding into other mineral areas, having recently acquired a graphite block in central India. The company is also exploring lithium, cobalt, and hydrogen production. These efforts are in line with India's 2070 net-zero emissions target.
Although coal still accounts for most of India's electricity generation, its role in the energy mix is shrinking. Future coal shipments may increase by just 3% annually over the next five years, according to Sankhe.
The company's shift is driven by both climate goals and market pressures. Smaller mining firms are taking a larger share of the market, pushing Coal India to adapt and stay competitive. 'It's wise to apply mining expertise in new areas,' Sankhe explained.
Coal India has one year to meet certain conditions to become the official bidder for the iron ore block. If it achieves this, the company will have three years to secure the mining lease. This move could help ensure reliable iron ore supplies for Indian steelmakers.
Dhruv Goel, CEO of BigMint, pointed out that state-owned operations often provide more stable supply lines. 'This will be a big boost for steelmakers,' he said, as the sector invests billions to boost production and meet rising domestic needs.