The Institute for Energy Economics and Financial Analysis (IEEFA) argues in a new report that optimism about India sustaining Australia’s metallurgical coal exports is increasingly misplaced.
India has made energy security a strategic priority, and this is already reshaping trade flows. Indian steel mills are turning to cheaper Russian met coal, adapting blends accordingly. Shipments from the US, Mozambique, Mongolia (via Russia) and potentially Canada are also increasing their market share.
This shift has directly impacted Australia. Its met coal exports to India have declined steadily since 2021, dropping 11 percent in 2024 alone. The trend compounds the broader structural downturn following China’s unofficial import ban in 2019, from which Australian exporters have not fully recovered.
Energy security and technological shifts reshape demand
IEEFA notes that India possesses domestic met coal reserves and is working to scale up production under its Atmanirbhar (self-reliance) policy. After surpassing 1 billion mt in thermal coal output in 2024, India is now turning its attention to metallurgical coal to reduce import dependence further.
More importantly, technological shifts are underway. Hydrogen-based direct reduced iron (DRI) and scrap steel recycling are gaining traction as cost-competitive and secure alternatives. BloombergNEF projects that green hydrogen will become cost-competitive in India and China in the 2030s, eroding the dominance of coal-based steelmaking.
Major Indian producers are aligning their strategies accordingly:
- Tata Steel has set a 2045 net-zero target.
- Jindal Steel aims for 2047.
- JSW Steel has committed to 2050.
These timelines, ahead of India’s national decarbonization targets, highlight a structural pivot away from coal.
Australian export forecasts face growing downside risks
Despite these signals, Australian miners such as BHP and Whitehaven Coal remain publicly optimistic, often emphasizing tightening global supply as a price support factor. The Australian government’s export forecasts similarly assume robust Indian demand over the long term.
IEEFA warns that these expectations are overly bullish. High prices, intended to reassure investors, could accelerate India’s shift toward hydrogen-based and scrap-based steelmaking, especially given India’s price-sensitive market conditions.
“In both the short and long term, Australia’s met coal miners face significant downside risks when it comes to India’s met coal demand,” said Simon Nicholas from IEEFA, adding, “India’s evolving energy security priorities and steel sector decarbonization plans are clear signals that relying on bullish forecasts is risky.”