The Fuel Crisis That Changed Everything
Picture this: It's 2026, and steel plants across India are scrambling. Natural gas, LPG, and propane are in short supply thanks to geopolitical tensions, including the US-Iran war. The Strait of Hormuz, through which 67% of India's LNG imports flow, is disrupted. The government prioritizes household gas supply over industrial use. Smaller steel producers are cutting output by 30-50%, rationing whatever fuel they can find. In Punjab's Mandi Gobindgarh, manufacturers can meet only half their customer requirements.
But at Jindal Steel's Angul facility, the furnaces keep humming. The galvanizing lines are running, the color coating lines are active, and heat treatment continues uninterrupted. How? They switched to syngas (synthesis gas) produced from indigenous coal. This wasn't just a quick fix—it was the culmination of a decade-long bet on coal gasification technology that's now paying off in ways nobody expected.
The Decade-Long Bet
The story begins in 2014, when Jindal Steel commissioned the world's first coal gasification-based Direct Reduced Iron (DRI) plant at Angul. With a capacity of 1.8 million tonnes per year, this plant used advanced gasification technology to turn domestic coal into syngas for iron-making. At the time, it was a bold experiment. Today, it's the foundation of their competitive advantage.
Fast forward to April 2026, and the company announced something unprecedented: deploying syngas in galvanizing and color coating line furnaces. This marks the first such application in the global steel industry. V.R. Sharma, Member of the Advisory Board at Jindal Steel, put it simply: "Thanks to the coal gasification process [Jindal] initiated a decade ago, we have been able to successfully operate our galvanizing lines, colour coating lines, and heat treatment lines using syngas as a fuel."
The Economics of Indigenous Coal
Here's the thing about imported fuels: they're expensive and volatile. India imports 92% of its methanol consumption and depends heavily on LNG and coking coal. When global prices swing—and they do swing wildly—steel margins get crushed. Coking coal prices peaked at $670 per tonne in March 2022, and natural gas prices spiked 20% following a single LNG facility closure in Qatar.
Jindal Steel's syngas strategy flips this equation. By using domestic coal, they're insulated from spot market volatility and currency fluctuations. P.K. Biju Nair, Executive Director at Angul, explains: "Synthesis gas from swadeshi coal can replace imported methanol, ammonia, ammonium nitrate, and LNG. India must utilise its vast coal reserves to future-proof low-carbon growth and reduce forex outflow."
The numbers are staggering. Industry estimates suggest coal gasification could save India ₹60,000-90,000 crore annually in import substitution. For Jindal, this means predictable costs in INR rather than riding the rollercoaster of international commodity markets.
The Carbon Challenge and CBAM
But it's not just about costs—it's about carbon too. The European Union's Carbon Border Adjustment Mechanism (CBAM) is now fully operational, imposing a duty of €173.8 per tonne (₹15,394) on Indian steel exports to the EU. That's 16.06% of the unit value. India's steel emission intensity of 2.54 tCO₂/TCS is significantly higher than the global average of 1.91 tCO₂/TCS, making Indian steel particularly vulnerable.
Jindal Steel is tackling this head-on. They've deployed syngas injection into blast furnaces, which reduces both carbon emissions and operating costs. The company has set a target to achieve net zero by 2047 (with an aspiration for 2035) and reduce CO₂ emissions by 30% by 2030 from a 2005 baseline. Their specific goal is to get below 2.0 tCO₂/TCS by 2030. AnnualReports +1
The company has also obtained International EPD® System certifications for Green Steel produced via the Electric Arc Furnace (EAF) route using 100% recycled scrap, reporting emissions as low as 458 kg CO₂eq/ton for steel plates and coils. This positions them well for carbon-conscious markets. InvestorPresentations
The Infrastructure Behind the Magic
None of this happens without serious infrastructure. The Angul facility hosts India's only steel plant adopting a coal gasification-based route for producing syngas-based DRI. The coal gasification plant has a capacity of 225,000 Nm³/Hr, and total DRI capacity across two locations reaches 3.12 MTPA. They've also integrated a 30 TPD carbon capture plant for converting CO₂ into valuable products. InvestorPresentations +1
The capital expenditure is substantial but strategic. While specific gasification capex isn't broken out separately, the company's total expansion program runs to ₹47,043 crore up to FY28. They've secured Viable Gap Funding from the Ministry of Coal and were selected under the government's ₹8,500 crore Financial Incentive Scheme for Coal Gasification in January 2025. AnnualReports +1
What This Means for the Future
The competitive moat here is real. While competitors were curtailing output and rationing gas supplies, Jindal Steel maintained full operations. That's not just about keeping the lights on—it's about capturing market share when others can't deliver. The company's export share has strategically decreased to around 6% as they focus on higher-margin domestic markets, but they're positioning themselves for a future where carbon intensity determines export viability. Transcripts
The technology leadership is undeniable. Operating the "world's first and largest coal gasification plant for steel-making" gives them a first-mover advantage that could extend beyond their own operations. While management currently focuses on internal deployment and operational excellence rather than technology licensing, the expertise they're building could become valuable as the industry faces mounting pressure to decarbonize and secure energy supplies. InvestorPresentations +1
The bottom line? Jindal Steel turned a vulnerability—India's coal dependence—into a strength. By investing in coal gasification when others were chasing conventional fuels, they've built a production model that's more resilient to supply shocks, more insulated from price volatility, and better positioned for a carbon-constrained world. As fuel shortages continue to plague the industry and carbon tariffs reshape export markets, that's not just a competitive advantage—it's a survival strategy.
