# Indian Steelmakers Evaluate Coal Gasification Amid High Capital Requirements Industry leaders weigh domestic energy security against the significant costs of gasification infrastructure. - **Source:** [mint - industry](https://www.livemint.com/rss/industry) - **Published:** 2026-10-18 - **Topic:** [Business](https://brifing.si/c/business) - **Original article:** - **On Brifing:** https://brifing.si/s/090f05ea-5d78-46d5-a6c4-68d95e29f46c ## Strategic Shift to Gasification India is pushing to convert domestic coal into syngas to enhance energy security and reduce reliance on expensive imported fuels. The government approved a 37,500 crore scheme in May, targeting 100 million tonnes of capacity by 2030. This initiative aims to utilize lower-grade coal reserves more efficiently across the industrial sector. ## Operational Benefits for Steel Steelmakers utilize syngas in the direct reduced iron route to produce sponge iron. This process allows for consistent quality and enables the use of G11 or lower-grade coal reserves. By shifting to domestic alternatives, companies aim to mitigate price volatility caused by geopolitical factors affecting imported coking coal and natural gas. ## Capital Intensity and Caution Despite the potential for raw-material cost savings of up to 15% in non-coastal states, many firms remain hesitant. The technology requires significant upfront capital investment for gasification plants. Consequently, major players like Tata Steel prefer to act as consumers of syngas rather than investing directly in the production infrastructure themselves. ## Divergent Industry Approaches Jindal Steel has already integrated coal gasification at its Angul plant, using syngas in blast furnaces to lower emissions. Conversely, other entities like ArcelorMittal Nippon Steel India are exploring partnerships through non-binding memorandums with Coal India Ltd. These varying strategies reflect the differing risk appetites regarding capital-intensive energy transition projects. ## Carbon Footprint and CCUS Coal gasification alone does not eliminate carbon emissions as it remains coal-dependent. However, integrating carbon capture, utilization, and storage (CCUS) could significantly lower the environmental impact. This is increasingly critical as steelmakers face pressure from international regulations like the European Union's carbon border tax, which penalizes high-emission production methods. ## Surface vs Underground Methods Surface gasification is currently the commercially established standard, with China leading globally with over 300 million tonnes of annual capacity. Underground coal gasification remains in early development stages, lacking large-scale commercial viability. While underground methods could potentially tap deep coal seams, they have yet to prove safe or economically feasible at scale. ## Conflicting Economic Projections Market intelligence firm BigMint suggests that cost reductions through gasification are unlikely due to the capital-intensive nature of the additional processing step. While some analysts highlight potential savings in logistics and raw materials, others argue that the high cost of the gasification plant offsets these gains, complicating the overall financial feasibility. ## Future Industry Outlook The long-term viability of coal gasification in India depends on balancing capital costs with the strategic need for domestic energy independence. As companies navigate these financial hurdles, the integration of CCUS will likely determine the technology's role in future-proofing steel production against tightening global carbon emission standards and market requirements. ## Sources covering this story - https://www.livemint.com/industry/why-india-s-steelmakers-are-eyeing-coal-gasification-despite-high-costs-11792035857724.html — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._