India’s dependence on thermal coke from abroad is beginning to raise concern in international circles, though some exporting countries are happy to have the business.
India sits on mountains of thermal coke, yet mainly due to bureaucracy, it has to depend on imports.
The day, it seems, is not far off when India will topple China as the World’s number one importer, if analysts were to be believed.
Coal, Coal, Everywhere But Nary a Chunk to Mine
The situation is, indeed, grim. It has made Indian Power Minister Piyush Goyal remark at a public platform that it (importing thermal coke) is shameful. The minister told an audience after inaugurating a power project recently near Nagpur in central India that the government plans to almost double the government coal production by 2019-20. He added that importing coking coal, used for making steel, may be a necessity but thermal coal is at a surplus in the country, yet India is still being forced to import it. A Ministry of Coal report estimated coal reserves at about 300 billion metric tons, of which 125 billion mt were in the “proved” category.
One estimate said in the last 10 years, India’s thermal coal demand grew at 25% CAGR. India, at present, imports about 150 million mt, and started importing thermal coal at a rate of about 25 mt in 2000. Imports were expected to touch about 190 metric tons by 2017. In 2018, when it tops 200 mt, India will have blown past China’s total coal imports, which are already slowing down.
India relies heavily on coal for a major part of its power production though it has now started diversifying into alternatives such as nuclear and solar energy. One of the many reasons companies need to import coal was a lag between actual requirements and production.
The reasons for the supply-demand imbalance are known to almost everyone in the enerfy business, and include:
- Failure to expand production capacity
- Land acquisition issues
- Environment and forest clearance issues
- The monopolistic hold of state-run Coal India on coal production
According to a report in the Business Standard, 25 state-owned power generation companies were likely to bring in 52 million mt of coal in the new fiscal year, which is about 70% of their total dry fuel imports by power firms.
More Imports Necessary
The figures released in a document by India’s Power Ministry in consultation with Central Electricity Authority (CEA), said 12 other private players would have to import another 21 mmt, taking the figure up to a total of 73 mmt of imported coal this fiscal.
After the recent bout of coal mine auctions, the government is likely to open up commercial mining of coal by the private sector. There are plans to give coal mines to the various states in order for them to meet their respective power generation needs.
One silver lining in all this, though, is that due to India’s heavy reliance on thermal coal imports, nations like Australia and Indonesia can thank India since Chinese imports have started slowing in the last few years, making India a welcome substitute for their exports.