India's coal imports set to rise as domestic output fails to match demand

Delays in land purchases, environmental awareness key challenges Coal India may encounter in increasing output

India, the world’s second-largest coal importer, is set to see a rise in shipments of the fuel as domestic production lags behind demand, Benjamin Sporton, Chief Executive at the World Coal Association said.

State-run Coal India Ltd., which produces more than 80 per cent of India’s coal, is failing to meet production targets, creating a gap that will be met through imports, Sporton said in New Delhi last week.

The Kolkata-based miner has missed shipment targets every year since at least 2010. It has focused on supplies to power stations, while curtailing shipments to buyers including cement and aluminum companies. At the same time, India’s electricity demand grew 6 percent from a year ago in the first ten months of the year ending March 31, double the growth achieved in the same period a year ago.

“Coal India is not quite keeping up to the targets,” Sporton said. “On the other hand, we’re seeing a strong growth in power demand.”

Delays in land purchases and growing environmental awareness are some of the key challenges Coal India may encounter in increasing output, he said. It also needs to apply more technology to mine deep-seated reserves, Sporton said. The company’s plan to reach an annual production of 1 billion metric tons has been pushed back by two years to 2022.

India’s coal imports during the first seven months of the current financial year declined 0.2 per cent from the year-ago period to 116.1 million tons, according to the latest data reported to lawmakers earlier this month. Imports dropped 6.4 per cent to 191 million tons during the year ended March 31, although they surpassed government estimates of 160.2 million.

“While we have seen a decrease in Indian coal imports in the past couple of years, we’ll probably see them increasing over the course of the next 12 months,” Sporton said.