At least six Indian companies have been directed by the Centre to investigate potential ventures, including sourcing coking coal and critical minerals such as copper, in Mongolia. Some of company names include Vedanta (including Sterlite), Adani and Hindalco for copper ore and concentrates; while JSW and SAIL are exploring opportunities around coking coal.
Multiple officials from key ministries told businessline that suggestions have been made to tap third-party logistics partners for ensuring transport of copper and coking coal from the land-locked central Asian nation, that shares borders with Russia and China.
Coking coal is a key steel-making feedstock, with India — the world’s second largest crude steel-maker — being a major importer. In case of copper, the demand for which is seen as a key economic indicator, the country is heavily reliant on imports again. And Mongolia is one of the major copper exporters globally; while coking coal exports from it are mostly to China.
An official familiar with the matter said the Mines Ministry had earlier this year asked Adani and Hindalco to look at business opportunities in Mongolia with relation to getting copper ores and concentrates; while the Steel Ministry had initiated talks for coking coal sourcing by State-run Steel Authority of India Ltd (SAIL) and JSW — the country’s largest steel-maker. Both expressed interest to “try-out” shipments on an “experimental basis”.
Apparently, some teams — across Ministries and also consisting of business house representatives — had visited Mongolia to explore opportunities and take-up business collaboration possibilities.
Due to some logistical challenges, Vedanta and Indo Gold Ltd, both experienced in overseas copper mining, were also seen as two probable companies that can explore opportunities there. Vedanta’s Sterlite, with its established refinery operations, is viewed as a strong candidate to leverage the region’s resources, an official said.
SAIL in an official response said, “the company is exploring possibilities to source coking coal from Mongolia” and procurement modalities and logistics solutions “are being assessed for feasibility”. “For diversifying and expanding the pool of suppliers, improve competition and increase supply chain resilience, as a part of business strategy, SAIL is exploring possibilities to source coking coal from Mongolia. Procurement modalities and logistics solutions are being assessed for feasibility,” the response said.
JSW declined to comment, while Vedanta, Adani and Hindalco are yet to respond to queries.
Chinese hang-over
Another official said, the logistics issue came up during meetings. Mongolia is land-locked with the country primarily using Chinese ports to ship minerals. “This is where some hesitancy came-in, with some of the Ministry officials suggesting that the China-route be avoided,” the person in the know said.
Some steel-makers have also sought setting up coal-washing operations in Mongolia. “Officials have suggested using third-party logistics as a possible solution and all possibilities are being explored,” the source said.
At present, the preferred route for copper movement in Mongolia is through Tianjin (in China).
Another solution is tapping the Vladivostok – Chennai or Vladivostok – other East India ports as possible routes for coking coal movement; but in case of copper, a near 3,000 km additional distance could be added if Vladivostok is seen as the key port. To access Vladivostok, Indian companies need to transport the mineral through a road – rail route combo.
