KOLKATA (miningweekly.com) – Coal exports could hold the key to managing mounting coal stockpiles in India, with shipments to neighbouring countries, moreover, seen as the most obvious choice to mark the country’s entry into the coal export market.
Under advice from the Coal Ministry, Coal India Limited (CIL) has started exploring opportunities to begin coal shipments to countries such as Bangladesh, Nepal and Sri Lanka.
Shipping coal to neighbouring countries, however, is seen as a short-term solution and domestic coal miners, led by CIL, will have to draw up medium- to long-term strategies to make their presence felt in international coal markets, as a steady presence in overseas markets could be key to the efficient management of their stock.
Stock management is an important aspect of the country’s goal of achieving a production target of one-billion tons a year over the next four years, a senior government official has said, pointing out that domestic demand is increasingly cyclical.
While over the past four months, CIL has been able to reduce its pithead stocks from an all-time high of 50-million tons to 43-million tons by June, incentivising domestic consumers to increase offtake in the midst of falling demand for electricity will only have a very limited impact on stock management in the medium term, the official has noted.
According to estimates of the government and CIL, exports to neighbouring countries could at best reach volumes of around ten-million tons a year and domestic miners will have to look beyond India’s neighbours.
India is a marginal player in coal exports with overseas shipments remaining under one-million tons a year over the past several years, according to Coal Ministry data.
However, Coal Ministry officials have acknowledged the “challenges” of India entering the international coal export market at the current juncture when even “heavyweights” such as Australia, the US and South Africa are facing severe adverse market conditions in terms of low prices of the dry fuel and a general shift from “dirty fuel” to renewables, in most developed energy markets.
However, that exports would be the next frontier for Indian miners was laid down in a recent statement by Coal Secretary Anil Swarup, who said, “CIL, which produces the bulk of the country’s coal will look at exploring avenues to export and prevent inventory build-up.”
For the 12 months ended March 31, 2016, CIL had increased production by 8.5% year-on-year to 546-million tons, while the government had set a production target of 598-million tons for the current year.
The Indian government is toying with the idea of helping Indian power companies to be more active in constructing new thermal power projects in neighbouring countries to develop demand avenues for the country’s coal. NTP Limited is building such a thermal power project in Bangladesh.