India links

Down to Earth No.85-86, August 2010

The following is extracted from a special report by Roger Moody of Nostromo Research, for Mines and Communities. The full report is at www.minesandcommunities.org/article.php?a=10299.

The world's second most-populated country was, until recently, believed to contain the world's fourth largest reserves of coal. The vast majority of its coal mines are owned and managed by a single state entity, Coal India Ltd (CIL), the biggest coal mining corporation by volume in the world (PTI, 24/2/1010).

However, TERI (The Energy and Resources Institute, Delhi) estimates that the country has "only 45 years" left of exploitable domestic coal - standing in stark contrast to an earlier estimate of 200 years (WC Asia Special 2010).

In 2009, India imported 45 mt of thermal coal, a significant proportion of which originated in Indonesia.

India generates 70% or more of its electricity by burning coal. (Hydro and "renewables" account for nearly 24% and nuclear power 4% (WC Asia Special 2010, op cit). There's no doubt that considerably more of the raw material will be required from overseas during the next 2-3 years.

However, there are varying projections of what this will mean in terms of coal demand. India's Ministry of Power predicts a 120 mtpa shortfall by the close of 2010, declaring that imports must be increased by 50 mt from next year (2011). Raising the stakes somewhat higher, a recent study by Citigroup estimates that India must purchase 140 mtpa, of both steam and coking coal, from foreign suppliers by 2014 - with 50 mt arriving before next year. The Indian Planning Commission sets a lower, but remarkably precise figure, of 81.03 mt being required from imports during 2011 itself.

At the same time, CIL - perhaps over-optimistically - says it will increase its total supplies (of both coking and non-coking coal) from 689 million tonnes in 2011/2012 to almost double (1,015 mtpa) by 2016, in order to satisfy demand (WC Asia Special ibid).

The Coal Ministry in early 2010 announced it was "encouraging" CIL to acquire or develop coal mining operations in Mozambique, Australia, Indonesia, South Africa and the US (WC 2/2010).

Tata Power (see also next section) has already got its dark tentacles deep into East Kalimantan and Mozambique.

Other major Indian companies hungry for Indonesian coal include GMR, Lanco, NTPC, PTC, Reliance and cement producer Binani (see next section).

Indian steel producers are also actively seeking acquisitions and investment opportunities in overseas metallurgical coal projects "to ensure supply security as well as guard against price volatility" (WC ibid), while Essar Steel already operates Indonesia's largest flat steel plant.

SAIL (The Steel Authority of India), the country's most significant producer of steel and iron ore for domestic use, has been in talks with firms in Australia, Aotearoa/New Zealand, Mozambique - and Indonesia - to this end (WC ibid).

References:
PTI: Press Trust of India
WC: World Coal magazine (monthly)