Globally coal is one of the most mined mineral and India is no exception in this regard. India has the total reserve of 320 BTs (Billion Tonnes), out of global total of 860 BTs (Billion Tonnes). Mining in India is deemed as a major economic activity and it is pertinent to note that it contributes significantly to the economy of India. Although, the GDP contribution of the mining industry in India varies from 2.2% to 2.5% only but going by the GDP of the total industrial sector in the country the contribution ranges more than 10% to 11%.
Coal demand is largely contributed by the sectors like power, iron & steel, cement, etc. The increasing pace of industrialization & urbanization has raised the demand even further. The gap in demand-supply is increasing year-on-year. World’s largest coal producer, and the nation’s largest coal mining body CIL (Coal India Ltd.) has failed since quite a time in ramping up its capacity. In the FY (Fiscal Year) 2014-15 the gap in CIL’s production target was 507 MTs whereas it was able to produce 494 MTs only. There is a 3% gap in planned v/s achieved coal production for CIL, and this is by far the smallest gap of CIL’s inability. Hence it is quite interesting to study whether CIL would actually be able to produce 1 BTs by 2020, or it’s just another dream.
The future of the other potentially large source of domestic coal, captive coal went into darkness with the historic verdict by the honorable SC (Supreme Court). GoI (Government of India) has done a commendable job to reduce the impact of de-allocation and not to result with any significant stranded capacity. And they have been active in thinking about introducing new policies to make the sector efficient and robust then ever. A few potentially game changer policies like coal swapping, coal pooling, PPP (Public-Private-Project) mode of operation in coal mining, auctioning of CIL’s FSA (Fuel Supply Agreement) are under consideration
Besides these, coal imports emerge as the only option to meet the demand-supply gap. But imported coal is costly, and the pricing is done as per the policies & regulations prevalent in the country with the coal resource, thus exposing the coal developer to financial risk. Again the rising coal imports will be a concern for the energy security of the nation. But even if these aspects are ignored, the existing infrastructure is not adequate to facilitate this large quantum of imports. Thus it opens up the door for the development of infrastructure like ports and shipping.
By meticulously examining the dynamics involved in the coal industry of India, enincon attempts to blend the factual status of the sector and present a dossier which would be first of its kind and would enable clients with reliable insights and better understanding of the coal and its consuming sectors in the country. The key queries which find answer in this report are: What is likely domestic coal production in India by 2020? What would be the coal import scenario in India and its possible impacts on the stake holders? In this dossier enincon delves deep to and most exhaustively examines the regulatory and industry structure of Coal in India and its key impacts on the stake holders. Through this report, enincon attempts to unveil the pressure on the power generation companies, steel companies and other coal consuming industries with rising coal cost and increased focus on securing imported coal. Also, the status of coal washing and captive coal mining is mapped to details in the report to project actual picture for all the stake holders. The dossier also factors the entire coal consuming sector and their demand is analysed in exhaustively with particular focus on associated risks, cost dynamics and logistics involved.
Key Queries Resolved: The key queries which are addressed in this report are:
- What should be the strategy of developers to ensure long term availability of coal?
- What would be the likely domestic coal production by 2022?
- What would be the coal import scenario by 2022 and it’s effect on various stakeholders?
- Which coal rich destination may become India’s next coal import destination in future?
- What is the importance of logistics and how to minimize the transportation cost?