Indian steelmakers weigh coal gasification despite high costs
Indian steelmakers are exploring coal gasification to cut reliance on imports, but high plant costs keep many of them cautious about direct investment.
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what happened
According to Mint, interest among Indian steelmakers in turning domestic coal into gas is growing, as companies look to reduce reliance on imported fuels, manage price swings and strengthen supply security. Building gasification plants is expensive, however, and many firms are holding back from direct investment. In May, the cabinet approved a 37,500 crore rupee scheme aiming for 100 million tonnes of gasification capacity by 2030.
Syngas made from coal can be used in the DRI route to produce sponge iron. Jindal Steel already uses it at its Angul plant, while Coal India and ArcelorMittal Nippon Steel India signed a non-binding memorandum to explore syngas supply. Tata Steel plans only to buy the gas rather than build plants. BigMint argues that cost savings are unlikely, because the extra gasification step is capital intensive.
why it matters
For coal and steel markets, this points to possible growth in domestic demand for lower-grade coal, but the cost advantage is disputed. Cutting the carbon footprint would require CCUS, which adds capital and operating costs.
market impact
Coal and steel in India: domestic coal demand could rise, but the cost effect remains unclear
tags
instruments
sources
- Why India's steelmakers are eyeing coal gasification despite high costs — Moody's, 18 October 2026 at 10:34 UTC
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