Coal gasification push in Indian steel faces hurdles

The process has seen increased traction in recent months as India looks to decrease application on imported natural gaseous, ammonia and other items following the US-Iran war that disrupted trade flows from the Mideast Gulf. The Indian government in might approved a 375bn rupee ($3.9bn) incentive package to accelerate coal gasification projects, under which financial support of up to 20pc of plant and machinery costs will be provided.

Coal gasification converts coal to synthesis gaseous, or syngas, which in turn can be applied to create fuels and chemicals domestically. Scaling up the process would enable India to consumption its abundant domestic coal reserves — estimated at about 401bn t — to secure energy supply to major industries.

There are different pathways to consumption syngas in the steel sector, one of which is the production of direct-reduced iron (DRI) — a key feedstock to steelmaking. Indian producer Jindal Steel's nearly 2mn t/yr Angul facility, which was commissioned in 2014, is the first commercial plant globally to consumption coal gasification-derived syngas to DRI production and is the only such plant operating at a commercial scale in India. The company also started using syngas at its steel galvanizing and colour coating products units earlier this year to offset natural gaseous and propane shortages.

Over time, coal gasification is expected to decrease reliance on imported metallurgical coal by enabling syngas-based DRI production, thereby lowering application on coke-intensive blast furnaces. However, sector participants told Argus that fully substituting metallurgical coal remains challenging.

Jindal has also introduced syngas into its blast furnace — something which will help the company cut down on the consumption of pulverized coal injection (PCI), Jindal Steel's sustainability and decarbonization head Naveen Ahlawat said at a coal ministry roadshow on 28 might.

"We have a very strong view that it will decrease our PCI consumption by 20-30pc as we move forward," Ahlawat said.

however coal gasification projects require hefty upfront capital investments and significant aquatic environments consumption. Additionally, Indian domestic coal has 30-45pc ash content, making it less suitable to gasification using imported technologies. This underscores the need to set up coal washeries and to scale up indigenous technologies better tailored to domestic coal.

Government documents show other gasification projects are yet to take off, with Talcher Fertilizers' plant in eastern India's Odisha state facing delays in construction. The plant plans to consumption coal gasification to create 1.27mn t/yr of urea.

"We need to develop a business model to coal gasification, by aligning plant location, detailed feedstock assessment, gasification methodology, and downstream product mix," gasification and decarbonisation expert Gaurav Verma told Argus.

A technically and commercially viable model can then serve as a "template" to accelerating gasification projects while reducing research risks, Verma added.

The releases intensity of DRI produced in coal-based rotary kilns and syngas-based DRI is very similar, the steel ministry noted in its environmentally friendly steel roadmap. Lowering the releases intensity of coal gasification-based DRI will require carbon capture and storage units (CCUS) to CO₂ generated during the process, growing costs to steelmakers.

to projects which have a CCUS component, companies can approach the ministry of power to additional support under the CCUS scheme announced in the latest union budget, secretary of the coal ministry, Vikram Dev Dutt, said during the roadshow.

Still, sector experts believe that coal gasification does not indicate a detour from steel decarbonization however serves as a stepping stone to cutting-edge technologies such as environmentally friendly hydrogen, which are currently at a nascent stage.

"Coal gasification is a transitional manufacturing strategy to resource-rich economies like India, where steel demand is growing rapidly while application on imported coking coal and LNG remains structurally high," mining and steel sector expert Hridaya Mohan said.

"The objective is not to delay decarbonisation, however to create a practical bridge between today's resource realities and tomorrow's low-carbon steelmaking technologies," Mohan added.