Forget Critical Minerals: A STEEL Boom is Underway in India

India is already the world’s second-largest steel producer.

And now the country has its sights set on ramping up growth; its latest target is to raise production from 200 million tonnes to approximately 300 million tonnes per annum.

Right now, the country’s steelmaking firms are on notice; they must secure the raw materials needed to accelerate India’s steelmaking ambitions.  

While the West obsesses over securing supply chains of critical minerals, like Rare Earths, Copper, and Antimony… India is going back to basics.

The country is doubling down on what it needs most: steel. And to achieve that, it must secure basic industrial raw materials.

So, what does that mean for Aussie miners?

India has rapidly ascended to become the world’s second-largest steel producer. But it’s still a long way from the number one spot, held firmly by China.

Last year, China produced around one billion tonnes of steel, five times as much as India.

So, while India remains a minnow compared to China, its output growth could soon explode:

Recent reports indicate that India intends to boost steel production by 50% in just five years.

Investors should pay attention to what’s happening here, especially when officials talk of ‘buying up’ companies in the steel-making supply chain.

So, will that lift Aussie iron ore miners?

Perhaps a little.

But it’s important to realise that a surge in steel production in India will look very different from the early-2000s China-fuelled boom. As you know, back then, the main game was iron ore stocks.

Yet India is already a major producer of this raw material, limiting the upside for Australian iron ore miners.

For that reason, COKING COAL could be the main game this time around.

Coking coal: The key ingredient in steel making, which India doesn’t have

Why does coking coal matter so much for a country looking to ramp up steel production?

Well, it lies in the workings of how steel is made…

In fact, the whole process starts with coking coal, which is heated to very high temperatures, turning it into a near-pure carbon product called coke.

Coke is then burned in a furnace with iron ore to achieve extremely high temperatures, creating a liquid metal that removes oxygen from the iron ore.

Ultimately, coking coal is the key ingredient that strengthens steel.

But unlike iron ore, India imports the majority of its coking coal, a whopping 85%.

That’s one reason why coking coal stocks could be the key beneficiaries of any India-led growth story in the future.

Here it is again: Government officials in India have directed their steelmakers to acquire international assets and secure the country’s steelmaking supply chain.

In my mind, that’s a clear blueprint to work with as an investor.

Until next time.