India’s thermal coal purchases are expected to surge to a record this year and remain robust through the next decade as domestic supply lags demand, according to the country’s largest importer.
Overseas shipments will climb almost 11% to 184 million metric tons during the financial year started April 1, and rise further to average about 200 million annually through the following decade, according Vinay Prakash, chief executive officer for coal and mining at Adani Enterprises Ltd. Generators designed to run on imported coal will keep fueling demand, while consumers close to the coast are also likely to favor imports due to the higher cost of railing domestic supply to their operations, he said in an interview.
India is seen maintaining its reliance on coal-fired power, which accounts for 70% of its electricity generation, even as the fuel emerges as a leading cause for the country’s toxic air. The nation’s continuing demand provides a lifeline for global exporters as other markets gradually shift toward renewable energy, including China, the world’s biggest consumer and producer.
“Demand for imported coal will always be there, regardless of our domestic production,” said Prakash. “Customers located near the coast may always find it cheaper to import because ocean freight is much cheaper than the railway freight they would need to pay if they get coal from Indian mines.”
India will be a key destination for coal from Adani’s Carmichael mine in Australia’s Galilee basin, Prakash said. The group’s planned 1,600 megawatt power plant in the eastern state of Jharkhand, may be supplied by the mine, along with customers in China, South Korea and Taiwan, he said.
India’s imports declined temporarily for two years during the early part of Prime Minister Narendra Modi’s five-year tenure after the government pushed state miner Coal India Ltd. to boost production. Slowing industrial demand also helped, creating hordes of coal inventories near mines and power stations.
Recently, the country’s commitment to reduce imports has been put to the test as demand rebounded. Consumers, many located close to mines, have been forced to revert to overseas purchases as domestic output and railway infrastructure failed to keep pace. India imported 166 million tons last year, according to Prakash, the second consecutive gain after two years of declines.