India is looking to increase imports of coking coal from Russia as shipments from top supplier Australia decline and local steel mills face higher prices, Reuters reported, citing government and industry sources.

Coking coal is a vital ingredient in steelmaking. India, the world's second largest steel producer, typically relies on Australia for over 50% of its annual imports of around 70 million tonnes.

However, supplies from Australia have been inconsistent in recent months due to outages and lower exports from Queensland, which caused prices to jump 50% to over $350/t last month.

While Australia has assured India of steady supplies, New Delhi is keen to diversify its sources beyond Canberra, the sources said.

India's steel producers tried boosting Russian coking coal imports last year but faced difficulties after western sanctions over the Ukraine conflict. Now, as Indian buyers and Russian suppliers establish payment mechanisms, imports are set to rise again.

Russian cargoes are cheaper than Australian supplies, and some exporters are willing to offer further discounts, they added.

Discounts and rupee payments have helped Indian companies look at Russia as an alternative, one government source was cited as said.

State-run Steel Authority of India Limited (SAIL) and Rashtriya Ispat Nigam Limited have opted for rupee settlements for Russian coal to take advantage of the currency arrangement, accordign to the reprot.

SAIL is expecting four shipments of 75,000 tonnes each from Russia in the current quarter, its chairman said.

In September, major Russian banks Sberbank and VTB Bank said they were improving conversion of rupees into roubles to help exporters access funds stuck in India due to currency restrictions.

(Writing by Alex Guo  Editing by Harry Huo)
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