ArcelorMittal's India joint venture has warned it may have to severely curtail steelmaking in the country and delay its expansion plans due to New Delhi's import restrictions on a key raw material, a company letter to the government showed.
In a bid to help the domestic coke industry, India, the world's second-biggest producer of crude steel, in December imposed curbs on imports of low-ash metallurgical coke, or met coke, with country-specific quotas.
But local suppliers are not able to meet ArcelorMittal Nippon Steel India's quality requirements for met coke, and the company in its letter to India's Commerce Minister Piyush Goyal has sought additional allocation from Poland and Japan to "sustain our operations".
"Circumstances are leading us to (a) compelling scenario wherein we will be forced to shut down our blast furnace operation from the month of June 2025 or to reduce production from April 2025," the Arcelor joint venture's India CEO, Dilip Oommen, said in the confidential letter.
"We are heading for a very difficult and uncertain period," he added in the letter dated February 19, which has been reviewed by Reuters.
ArcelorMittal Nippon Steel India, a 60-40 joint venture between Luxembourg-based ArcelorMittal and Japan's Nippon Steel, did not respond to a request for comment.
India's Commerce Ministry and Goyal's office also did not respond to comment requests.
The letter reveals the panic caused by India's policy to limit imports of met coke, and foreign-owned steelmakers' fears of business disruptions. Domestic rivals JSW Steel and Tata Steel have also opposed the move.
India's imports of low-ash met coke have more than doubled over the past four years, and New Delhi has restricted total overseas purchases to 1.4 million metric tons between January and June.
Last week, Reuters reported India could extend the curbs on met coke to encourage local steel mills to source the ingredient from domestic suppliers, despite objections from steel producers citing a lack of domestic availability and quality concerns.
ArcelorMittal-Nippon has a 5% market share of India's steelmaking market, which has an annual capacity of 200 million metric tons. It has a plant in western Gujarat state, where it fears its business could be impacted by the quotas for met coke.
The company also said in the letter it is expanding its operations with a $9 billion investment which started in 2021. It plans to quadruple its steel capacity in India to 40 million metric tonnes a year by 2035, and was due to start another blast furnace in December in India.
ArcelorMittal-Nippon "may need to delay commissioning of new blast furnace", it said in the letter.
Steel mills in India are already reeling from record high imports of steel and softening local prices that are hurting their profits and could lead to job cuts.
JSW Steel has said India's import curbs on met coke do not make "strategic sense".
The quotas were imposed after India's Directorate General of Trade Remedies said it wanted to protect domestic met coke producers from rising imports. Major suppliers of the raw material include China, Japan, Indonesia, Poland and Switzerland.
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