The country's coking coal imports could see a double-digit percentage increase this fiscal year as a scarcity of high-quality iron ore after a mining ban is forcing steelmakers to use inferior grades that need more coal to process into steel.

The world's third-largest importer of coking coal shipped in 32.2 million tonnes last year. The use of low-grade iron ore would mean more coal purchases from traditional suppliers such as Australia, South Africa and the United States helping support prices even if demand from China tapers.

Mr Jim Truman principal coal analyst at energy consultancy Wood Mackenzie said that "Some of the lower-quality iron ores mined in India have a higher than normal alumina content, which leads to higher slagging (residue from smelting of ore) in the blast furnace. "As a result, when using more of this product, blast furnaces require higher levels of heat."

Mr Seshagiri Rao joint managing director of JSW Steel said that "The problem that is coming up today is that low-grade ores contain very high alumina and silica which cannot be taken out during the beneficiation process. That's when fuel consumption goes up."

Mr Rao said the company's coking coal consumption could rise about 15% this fiscal year mainly due to the use of low grade iron ores. JSW Steel imports all of its coal needs about 14 million tonnes last fiscal year due to a shortage at home.

Domestic steel companies have traditionally preferred high-grade ores as every percentage point increase in iron content improves productivity by 2 percentage points and reduces coking coal consumption by 1 percentage point, according to the Indian Bureau of Mines. Ore with more than 64% iron is regarded as high grade.But mining bans in key producing states have forced Indian steel companies to adopt methods to be able to use even low-quality ores containing as low as 48% iron accumulated over the years.