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India’s push to build more blast furnaces to meet its growing demand for steel raises a critical concern: It will result in increased imports of metallurgical coal. Industry leaders highlighted the risks of such import reliance at the Indian Steel Association’s Coking Coal Summit in September. 

India is currently dependent on imports for around 90% of its metallurgical coal needs, and in the first eight months of 2025, nearly half of it came from a single country—Australia.

Statements from Australian coal miners have indicated that the energy security risks for India are on the rise.

Australia is by far the world’s biggest exporter of metallurgical coal—which includes coking coal and pulverised coal injection, both used in blast furnaces—with most of its production based in Queensland. However, data analytics firm Wood Mackenzie, warns that Australia requires over 100 million tonnes per annum of new hard coking coal (HCC) mine capacity by 2050 to avoid a supply shortfall. 

A factor threatening to worsen this shortfall is Queensland’s contentious progressive royalty regime, introduced in 2022, under which royalty rates increase with the price of coal.

In recent weeks, major Australian met coal miners reported their financial results, taking the opportunity to highlight how Queensland’s royalty rates are deterring investment in new mine capacity. 

Long-term met coal investment in doubt

Two of Australia’s key suppliers to India—BHP and Whitehaven Coal—have been vocal in their criticism of Queensland’s royalty regime. 

BHP, the world’s largest mining company and Australia’s leading met coal exporter through its BHP-Mitsubishi Alliance (BMA) joint venture, is a critical supplier to Indian steelmakers. A previous company statement disclosed that 40% of the company’s met coal exports go to India.

On the royalty regime, BHP has made its position clear. In its latest company statement, CEO Mike Henry said BHP will “not invest any growth capital in Queensland, both for cost and risk”, adding that the royalty hike means the state is “no longer investible” for long-term projects. 

In its most recent Economic and Commodity Outlook, the company reinforced this position, noting that “new seaborne supply will increasingly be challenged as Queensland’s royalty and approvals environment remain unconducive to long-life capital investment”.

Paul Flynn, Whitehaven’s CEO, has voiced similar concerns, emphasising that Queensland’s royalty regime is already diverting capital into New South Wales (NSW). However, with production in NSW dominated by thermal coal, this shift risks restricting future investment in met coal capacity—a concern for India.

Another met coal producer in Australia, Peabody, also hit out at the royalty regime. In late August, its chief financial officer Mark Spurbeck said, “With some steelmaking coal producers in Queensland struggling and even failing at current prices, the royalty structure is out of touch with industry fundamentals.”

Meanwhile, the Queensland government has ruled out changes to the coal royalty scheme.

Solutions for India—beyond Australian coal

According to S&P Global, India received 54.5 Mt of coking coal in the January-August 2025 period. Of this, Australia supplied 26.4 Mt (49%), while Russia supplied 13.3 Mt (24%), the US 6.7 Mt (12%), and Mozambique 4.2 Mt (8%).