CIL, ArcelorMittal sign MoU to explore syn-gas usage from a coal gasification plant at Paradip

New Delhi: Coal India Limited (CIL) told the stock exchanges on Wednesday that it has executed a non-binding Memorandum of Understanding (MoU) with ArcelorMittal Nippon Steel India Private Limited (AMNS) the same day, to examine the use of syn-gas from a gasification facility CIL would set up next to the steelmaker's Paradip pellet plant in Odisha.

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What the filing says

The filing said that the MoU will be "exploring the possibility of utilising syn-gas produced from a coal gasification facility, proposed to be established by CIL adjacent to/at the AMNS Paradip Pellet Plant coupled with CCUS."

The agreement was signed by Dr Peeyush Kumar, GM BD CIL and Dr Arvind Bodhankar, Chief Sustainability Officer, ArcelorMittal Nippon Steel India Pvt Ltd.

On the scope of work, it said: "Under this Non-Binding MoU, initially the focus shall be to assess the technical, commercial, and implementation modalities of the project and to facilitate preparation of a Preliminary Feasibility Report ("PFR") for evaluating project viability."

The filing disclosed no capacity, investment figure, coal source, gasification technology, timeline, equity structure, or which CIL subsidiary would execute the project.

Plans afoot to set up coal gasification projects close to industries

The arrangement corresponds to the second of two models CIL set out in an expression of interest earlier this year. CIL planned to set up coal-to-syngas units either at pithead locations or adjacent to user industries such as fertiliser units, direct-reduced iron plants and gas-based power plants, developed on a build-own-operate or build-operate-maintain basis by developers or consortia. Under the second model, the plant sits next to a single large industrial consumer, with the stated objective of on-site generation for a dedicated anchor off-taker and production tailored to that off-taker's requirements. CIL also issued a separate expression of interest to identify industrial off-takers willing to use syn-gas from facilities established by CIL or its designated SPV or JV under those modes.

AMNS India is a joint venture of ArcelorMittal, which holds 60 percent, and Nippon Steel, which holds 40 percent. The company said in September 2021 that commissioning a second 6 MTPA unit had taken pellet capacity at its Paradip complex to 12 million tonnes. Its operations page describes an 8 MTPA beneficiation plant at Dabuna connected to Paradip by a 253-km slurry pipeline.

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CIL's existing gasification projects

CIL has two incorporated gasification joint ventures. Bharat Coal Gasification and Chemicals Limited (BCGCL), in which CIL holds 51 percent and BHEL 49 percent, is building a coal-to-ammonium nitrate plant at Lakhanpur in Jharsuguda district, Odisha, on about 350 acres of Mahanadi Coalfields land. Mahanadi Coalfields Ltd (MCL) is slated to supply 0.79 million tonnes a year of washed coal and 1.19 million tonnes a year of reject from its Ib Valley washery.

Replying to Parliament this month, Minister of State for Coal Satish Chandra Dubey said BCGCL had obtained environmental clearance, awarded EPC contracts and held its groundbreaking on June 20, with commissioning targeted in FY30, while the CIL-GAIL synthetic natural gas venture in West Bengal was at the pre-construction stage with tendering under way, also targeted for FY30. A third collaboration with SAIL, for syn-gas supply to direct reduced iron production at Durgapur, has not advanced beyond feasibility study to formal sanction.

Policy backdrop

The Union Cabinet approved a Rs 37,500-crore scheme for surface coal and lignite gasification on May 13, targeting gasification of about 75 million tonnes by 2030, with incentives capped at 20 percent of plant and machinery cost, Rs 5,000 crore per project and Rs 12,000 crore per entity group, disbursed in four milestone-linked instalments. The government also extended coal linkage tenure to 30 years under the "Production of Syngas leading to Coal Gasification" sub-sector in the non-regulated sector linkage auction framework. It said the new scheme builds on the National Coal Gasification Mission of 2021 and a Rs 8,500 crore scheme approved in January 2024, under which eight projects worth Rs 6,233 crore are under implementation.

On the CCUS side, the Union Budget 2026-27 allocated Rs 20,000 crore over five years for carbon capture technologies in heavy industry. The Department of Science and Technology's RD&I roadmap released in December 2025 sets out an ambition to capture 750 million tonnes of CO2 a year from hard-to-abate sectors such as steel and cement by 2050. Indian steel-sector CCUS deployments to date have been pilot-scale, including units at Tata Steel's Jamshedpur works and JSW Steel's Dolvi plant.

Gas is used in steelmaking primarily to produce direct reduced iron. Close to 80 percent of India's DRI output remains coal-based. Producers, including JSW Steel and AMNS, rely on the gas-based route.

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