Can India replace imported coal with what is obtainable at home?

---

---

The Government of India has set up an ambitious target to produce around 1.3 bt of coal by FY25 and around 1.5 bt by FY30. India achieved a record coal production of 780 mt and auctioned 64 coal mines for commercial usage as per the Year End Review 2022 released by the Ministry of Coal.

In the process, the government ensured that thermal power plants and other sectors across the country had adequate access to coal. The ministry’s moves such as opening up coal mines for commercial auction, holding investors’ conclaves, etc., are likely to help India’s journey in energy security.

According to government estimates India’s coal inventory as on April 1, 2022, recorded an increase of around 9,285 t as against a year before, rising from around 352,125 t to 361,411 t. Production in FY 22 for April to November period surged from 448 mt to 524 mt, recording a 17% growth.

Interestingly, the government has upped the ante for customer satisfaction through quality assessment of supplies through independent third-party sampling agencies.

In addition to the Central Institute of Mining & Fuel Research (CIMFR) and Quality Council of India (QCI), two more agencies, SGS India Private Limited for power and non-power sectors and Mitra S K Private Limited for power sectors have been roped in as third party agencies.

Coal India Limited (CIL) has done a commendable job in improving the coal quality through some key initiatives such as mobile crushers, procurement of online ash analyzers, first-mile connectivity, etc.

Such better governance of quality coal and grade conformity through third-party sampling methods has enhanced the quality from 65% in April to March 2021 period to 69% for the April to November 2022 period.

The government is also mooting the idea of the gasification of coal significantly. This will enable India to scale down its energy imports and help meet the CoP-21 Paris Agreement commitments.

To realize this objective CIL has inked pacts with Bharat Heavy Electricals Limited (BHEL), Gas Authority of India Limited (GAIL), and Indian Oil Corporation Limited (IOCL).

The current geopolitical situation is also favouring the move towards exploring domestic resources. In the wake of the Russia-Ukraine war and sanctions on Russian coal, many countries turned to Australia for high-grade coal.

With Australian coal prices skyrocketing there was a steep plunge in shipments to India from Australia. In CY 2022, we witnessed a close to 50% drop compared to a year ago. There was a substantial drop in buying 5500-grade NAR coal. Larger parts of Asia however continued to do business with Indonesia.

India has a huge domestic market with good consumption for coal from power and many other sectors. Relying on imports wherein the market situation nowadays is volatile can tighten the purse strings making it obvious that we need to find Atmanirbharata.

Can India replace imported coal with what is available domestically? Market analysts opine that it can but with further improvement in domestic supplies and railway logistics. Considering that there’s been a rebound in captive production and the coming to age of private commercial mines, there is a better chance of fulfilling this vision.

India’s earlier efforts in reducing coal imports first during the regime of Shri Manmohan Singh’s UPA II and later when Shri Narendra Modi, the current Hon’ble Prime Minister of India took over had fallen flat.

India has huge domestic availability of coal, however, the failure to convert this asset into a productive one ensured that the country met its needs through imports. The fall in global commodity prices during the previous decade also led to buyers favouring cheaper imports.

The pandemic and the ongoing war altered this process and once again business entities began coming back to homegrown coal. With private mines beginning production, we may see a welcome change. Much also depends on the railways since that is a more cost-effective mode of transportation compared to transporting through roads.

Increased availability of rakes will ensure seamless transportation from one region to another and if we get more dedicated rakes that will help immensely. This coupled with adequate mining will help replenish stocks and bring down shortages in the market.

India could perhaps then rewrite history and open a new chapter eventually paving way for not only healthy domestic consumption from what is available indigenously but also exploring markets overseas in a big way.