Friday, 17 May, 2024
By: Yash Gupte
Petcoke imports to India, which are mostly utilised by cement factories since it is less expensive than coal, more than doubled to 9.77 million tons in 2022. Image Source: IANS
According to the Indian consultancy firm- Coalmint, India's imports of thermal coal, used mainly for power generation grew 14.7 percent to 161.18 million tons in 2022.
The FY2022-23 has been one of the most fruitful years for India’s coal industry as India’s domestic coal production reached a historic high of 892.21 MT. The Ministry of Coal has set a target of producing 1024 million ton of coal in FY2023-24, a 13 percent growth year-on-year. Prime Minister Narendra Modi in a tweet, expressed his happiness over the highest ever coal production in the history of India. The PM tweeted, “Outstanding accomplishment in an important sector for economic growth.” The government is emphasizing on increasing domestic coal output and reducing non-essential coal imports into the nation. Production of coal grew by 8.67 percent in 2021–2022 compared to the previous year. During the current year till February, 2023, domestic coal production has increased by over 15 percent compared to the same period of last year. In 2023–2024, it is estimated that domestic coal production will reach more than 1BT. The Ministry of Coal has conceptualized an Action Plan for the FY 2023-24 with the goal of achieving Aatmanirbhar Bharat by enhancing the production, efficiency, sustainability, new technologies etc. in the coal sector.
In comparison to 716.08 MT in 2020–21, the nation as a whole produced 778.19 MT of coal in 2021–22. Around 28 of the top 37 coal mines produced more than 100 percent of their total output in January 2023, and three other mines produced between 80 and 100 percent. The coal production in FY 2022-23 increased by 14.65 percent to 892.21 MT as compared to 778.21 MT in 2021-22.
But in spite of record high coal production in the country, why is India still dependent on coal imports from other countries? According to the Indian consultancy firm- Coalmint, India's imports of thermal coal, used mainly for power generation grew 14.7 percent to 161.18 million tons in 2022. According to data, coal shipments, which are normally used to make steel, also grew somewhat. Anthracite production jumped 12.2 percent to 1.79 million tons, PCI coal shipments increased 8 percent to 13.43 million tons, and imports of coking coal gained 0.8 percent to 56.1 million tons. Petcoke imports to India, which are mostly utilised by cement factories since it is less expensive than coal, more than doubled to 9.77 million tons in 2022. Surge in power demand due to an uptick in industrial activity following a decline in COVID-19 related restrictions and an intense heat wave in the first half of the year led to an increase in import of thermal coal.
Source: Ministry of Coal
India imports millions of tons of coal since there aren't enough reserves of coking coal, which is utilised as a raw ingredient in the production of steel and other industries. The imports are mostly used to make up for the shortage of high-quality coal, particularly coking coal, from domestic mining sources. The government-run Steel Authority of India Limited and other steel producing facilities import coking coal primarily to fill the gap between demand and domestic supply and to raise the quality. India doesn’t have sufficient reserves of premium quality coking coal and most of the commodity is imported from Indonesia, USA, Russia and Australia.
According to a report published by CareEdge Ratings, India’s coal production will increase in financial year 2023-24, driven by a ramp-up in production of state-owned Coal India Ltd (CIL) and NLC India Limited by engaging mining developers cum operators (MDOs). Additional output is anticipated from both the current captive mines and the new ones. India recorded highest ever import of coal in the year 2019-20. About 248.53 MT of coal worth Rs 15,27,320 million was imported in 2019-20.
The government has taken several steps in order to reduce imports and maintain a constant supply of coal in the country. Some of the steps are- Regular reviews by Ministry of Coal to expedite the development of coal blocks, Single Window Clearance portal for the coal sector to speed up the operationalization of coal mines, Project Monitoring Unit for handholding of coal block allottees for obtaining various approvals / clearances for early operationalization of coal mines. Apart from this the Ministry of Coal has requested the Ministry of Environment, Forest and Climate Change (MoEF&CC) to allow coal mines with existing Environmental Clearances to increase their production up to 40 percent, to hike by up to 50 percent without Fresh Environmental Impact Assessment or Public Consultation. Talking about the import of coal, according to the current import policy, consumers themselves may freely import coal (under Open General Licence) based on their own needs and commercial discretion.
For ease of doing business, the Ministry of Coal has established a Single Window Clearance System (SWCS) portal. The Ministry’s unique project, SWCS, aims to develop a platform for obtaining multiple clearances for early operationalization of coal mines, which would ultimately lead to an increase in the nation's coal production through a single entry point. In order to provide a boost to the mining sector, 100 percent Foreign Direct Investment has also been allowed for commercial mining.
Source: Ministry of Coal
Coal India Limited or CIL produced 606.89 MT in 2018-19 and increased its production by 15.9 percent in last five years, taking the production to 703.21 MT in 2022-23. NITI Aayog in a draft report estimated that India’s coal demand will increase to 1.1-1.3 billion tons by 2030. Coal India is expected to produce one billion tons by 2025-26. Exploring and utilising the alternate sources of electricity generation is extremely important for the country as India faced massive power outages and crisis in the previous year.
With 737.9 million tons of total dispatches in FY23, a 9.1 percent year-over-year growth, the domestic coal consumption by the power sector is still strong. Dispatches to the electricity industry are expected to keep increasing, according to CareEdge Research, due to rising demand from coal-based power plants. Tanvi Shah, director of CareEdge Advisory & Research, observed that although imports have increased compared to previous year due to greater blending requirements, government measures to increase domestic output will, in the medium to long term, reduce dependence on imported coal. Due to the increased demand, especially in China and India, coal prices are predicted to stay high relative to pre-pandemic averages.
Though India has hit a new milestone in production of coal, it is evident that there’s more need to be done in order to minimise coal imports.
