A new report from the American Institute for Energy Economics and Financial Analysis (IEEFA) warns that India must accelerate efforts to reduce its heavy dependence on imported metallurgical coal, especially from Australia, or it will face growing long-term energy security risks in its steel sector. As India seeks to achieve 300 million tons per year of crude steel production by 2030, its reliance on blast furnace (DP) technology makes the industry seriously vulnerable to disruptions in the supply of mined coal.
Domestic coal reserves are unsuitable for blast furnace operations due to the high ash and sulfur content, as a result of which India depends on imports for about 90 percent of its coal production. Australia remains the dominant supplier, making India's steel sector sensitive to Australian market conditions and export decisions.
Australian metallurgical coal is facing increasing risks
IEEFA highlighted the growing set of risks faced by the Australian metal supply coal, which could expose Indian steel producers to future shortages and structural price increases. These risks include overly optimistic forecasts for Australia's exports, slowing field development, higher financial and regulatory barriers, rising mining costs, legal restrictions related to methane emissions, and increased price volatility related to climate disruptions. It was noted that Australian courts are increasingly blocking the expansion of coal mining for reasons related to climate change.
Australia's goal of achieving zero emissions by 2050, two decades earlier than India's goal by 2070, is expected to step up domestic efforts to reduce emissions by adding additional limits.
The country's signing of the Belen Declaration at the UN Climate Change Conference (COP30) in November 2025, committing itself to a rapid and fair transition from coal, oil and gas, reinforces this long-term pressure.
Long-standing supply problems exacerbate future risks
IEEFA highlights structural constraints that precede changes in climate policy, including the rising costs of coking coal mining, mining companies increasingly prefer the acquisition of existing assets rather than the development of new ones
