India May Increase Coal Imports Soon

India May Increase Coal Imports Soon

Indian coal imports may increase after 2020 as mining and infrastructure constraints stump the nation’s domestic production ambitions, according to consultant CRU Group.

Output will expand to 810 million metric tonnes by the end of the decade, less than India’s targeted 1.5 billion tonnes, Matthew Boyle, Sydney-based principal consultant at CRU, said in a report on Tuesday. This opens the possibility for an increase in shipments to the world’s second-biggest importer from countries including Australia, South Africa, Indonesia and Russia, the report said.

“The Indian government’s target to increase domestic production to create self sufficiency is a valid ambition, but the time frame makes the goal unrealistic,” Boyle said in the report. “This could result in potential growth in sales from trading houses across Asia, as well as Australian and South African miners.”

India is the world’s third-biggest producer and consumer of the fuel, according to the International Energy Agency. Reserves are deep and in forested areas and there are significant rail bottlenecks affecting the movement of coal from mines to demand centers, which are unlikely to be rectified by 2020, according to CRU.

The country’s monopoly miner Coal India Ltd uses the less-complicated, surface-mining method of extracting coal known as open cast.

The majority of India’s new coal-fired power projects are built near the coast and have port and unloading capabilities, boosting the potential for increased imports, CRU said. While many nations are scaling back on the fossil fuel, coal fires more than 60% of India’s generation capacity.

Bloomberg