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Jindal Steel's commissioning of India's first coal gasification-based DRI plant eliminates approximately $28 million annually in imported fuel costs for a mid-sized 1.8 million tonne facility. Coal gasification — the process that converts coal into synthesis gas (syngas), primarily carbon monoxide and hydrogen — enables steelmakers to replace expensive imported natural gas, LPG, and propane with domestic coal-derived fuel. This syngas serves as a clean and versatile fuel, capable of replacing expensive and often price-volatile imported energy sources such as natural gas, LPG, propane, and coking coal. At current JKM LNG prices of approximately $19.42/MMBtu, a 1.8 million tonne DRI plant consuming 50,000 MMBtu daily of natural gas equivalent faces annual fuel costs exceeding $355 million — costs that Jindal's syngas technology can reduce by 40-60% using domestic coal priced at $40-50/tonne.
Jindal has deployed syngas across three critical steelmaking stages: establishing India's first coal gasification-based DRI plant, deploying syngas in galvanising and colour coating line furnaces (described as a global first for the steel industry), and introducing syngas injection into blast furnace operations. Each application addresses specific margin pressures. In DRI production, syngas replaces natural gas as the reducing agent, converting iron ore to Direct Reduced Iron at heating values of 250-300 BTU per cubic foot compared to natural gas at 1,000 BTU per cubic foot — requiring process modifications but delivering 70% cost savings. The company has begun injecting syngas into its blast furnace operations, helping optimise fuel efficiency while reducing the consumption of imported coking coal. For blast furnace injection, every 100 kg of syngas injected reduces coking coal consumption by approximately 80 kg, saving $50-70 per tonne of hot metal produced.
On the buy side: Large integrated steel producers with existing coal gasification infrastructure (Tata Steel, JSW, SAIL) face capital expenditure of $200-400 million to retrofit existing DRI plants for syngas compatibility, but gain long-term fuel cost stability and reduced foreign exchange exposure. Mid-sized regional producers operating 0.5-2 million tonne DRI facilities confront prohibitive upfront costs of $300-600/tonne of annual capacity for new coal gasification plants. On the sell side: India currently imports 90% of its coking coal, with the sector's significant import dependency particularly for coking coal which meets approximately 95% of the industry's requirements. Coal-to-chemicals technology providers capture project development margins of 15-25% on turnkey gasification installations. Domestic coal suppliers gain gasification-grade premiums of $10-20/tonne over thermal coal. LNG and LPG importers lose industrial steel customer volumes worth $50-100 million annually per major steel complex.
For large integrated steelmakers with derivatives access: Lock coking coal prices through 12-month forward contracts at current levels around $190-220/tonne FOB Australia, while evaluating coal gasification technology partnerships with proven operators like Air Liquide or Lurgi. Deploy currency hedging to protect against rupee depreciation on remaining fuel imports. For smaller regional steel producers without gasification infrastructure: Secure bilateral term contracts with domestic coal suppliers for consistent quality feedstock, diversify energy sources through renewable power purchase agreements for electric arc furnace operations, and explore industry consortiums to share coal gasification infrastructure costs. Consider transitioning to scrap-based EAF production where economically viable, reducing coking coal dependency from 550-600 kg per tonne of crude steel to zero.
Coal gasification coupled with carbon capture and utilisation technologies will lower emission intensity, support CBAM compliance, and strengthen export competitiveness. The emission intensity of steel produced in India is approximately 2.5 tons of CO₂ per ton of crude steel, while globally this is approximately 1.9 tons, and in scrap-based systems can be as low as 1.3 to 1.5 tons of CO₂ per ton of crude steel. Beginning on January 1, 2026, CBAM will be fully enforced, and importers will be required to pay for the carbon contained in their shipped steel — steel with higher emissions will arrive in Europe with a higher landed cost. For observers: Monitor the Platts TSI 62% Fe iron ore index — if it sustains above $110/tonne through Q3 2026, expect accelerated DRI capacity additions that favour gas-based over coal-based reduction. Track the India rupee-Australian dollar cross rate — every 5% rupee depreciation adds $10-12/tonne to coking coal import costs, strengthening the economic case for domestic coal gasification by Indian steel producers.