ArcelorMittal’s joint venture in India warns of possible major production cuts and delays in expansion due to government import restrictions on met coke. The company seeks increased allocations from foreign suppliers, as domestic sources cannot meet quality requirements. Dangers to operations may arise by mid-2025, with industry concerns mounting over India’s direction on import policy.
ArcelorMittal’s joint venture in India has issued a warning regarding potential drastic cuts in steel production, as well as delays in expansion plans. This situation arises from the Indian government’s implementation of import restrictions on low-ash metallurgical coke, a crucial raw material used in steelmaking. The Indian administration enacted limits on imports to support its domestic coke industry but has inadvertently affected foreign companies’ operations.
The local suppliers have been unable to meet ArcelorMittal Nippon Steel India’s stringent quality demands for met coke. Consequently, the company has requested increased allocations from suppliers in Poland and Japan to ensure operational continuity.
Dilip Oommen, the CEO of the joint venture in India, indicated in a letter to Commerce Minister Piyush Goyal that the company may be compelled to halt operations at its blast furnace by June 2025 or reduce production as early as April 2025. This letter, dated February 19, revealed the precarious situation that foreign steelmakers now find themselves in.
The import restrictions have elicited concern among local competitors, such as JSW Steel and Tata Steel, who also expressed opposition to these curbs. Over the past four years, India’s imports of low-ash met coke have significantly increased, prompting the government to limit total imports to 1.4 million metric tons during the first half of the year.
There are indications that India may extend its met coke import restrictions in a bid to promote sourcing from domestic suppliers, despite the industry’s concerns regarding quality and availability. ArcelorMittal-Nippon controls a modest 5% of the Indian steel market, which has an annual capacity of 200 million metric tons, and has voiced apprehensions regarding the impact of the met coke quotas.
The company stated its plan for a $9 billion expansion, which began in 2021, with an aim to increase its steel capacity to 40 million metric tons per year by 2035. However, delays in the commissioning of new blast furnace operations might become necessary due to the current restrictions. Indian steel mills are already facing economic pressures from heightened steel imports and dwindling local prices.
Furthermore, JSW Steel criticized the import curbs, indicating that such policy decisions do not align with strategic interests. The quotas were introduced following recommendations from India’s Directorate General of Trade Remedies, which aimed to shield domestic met coke producers against the influx of imports from countries such as China, Japan, Indonesia, Poland, and Switzerland.
In summary, ArcelorMittal’s India operations face severe challenges due to governmental restrictions on met coke imports, risking considerable production cuts and delays in expansion plans. The joint venture has called for additional allocations from international suppliers to sustain its operations while voicing concerns that the recent policies could jeopardize its commitment to invest in India’s steel capacity. The unfolding situation emphasizes the growing tension between supporting domestic industries and the operational realities of foreign steel producers.
Original Source: www.livemint.com
