Are coal exports to India a lost cause?

Launceston, Australia

THE Australian government thinks there are opportunities to boost coal exports to India. The Indian government wants to cut imports by half by boosting domestic output, but both could turn out to be correct.

India is already the world's third-biggest energy consumer and with plans to grow the economy rapidly, it's likely to move up the ranking in coming years.

However, how the world's second-most populous nation increases its energy demand is not set in stone, and the country looks to be the petri dish of whether renewable energies such as solar and wind can genuinely replace fossil fuel generation.

No matter what happens with renewable energy in India, coal is going to stay a major part of the generation mix, given the country has added 123 gigawatts (GW) of coal capacity in the past decade, taking the total to more than 200 GW.

The rapid build-out of coal generation has led to efforts to boost domestic output, led by state-controlled producer Coal India. While much of the commentary on Coal India focuses on the company's routine failure to meet ambitious production targets, this clouds the fact that it has actually been quite successful in boosting its output.

The world's largest coal mining company has gone from producing 462 million tonnes in the 2009/10 fiscal year to 607 million tonnes in 2018/19. Coal India only just missed its 610 million tonne target in the last financial year, and its aim for the current 2019/20 year is to reach 660 million tonnes. This seems like too much of a stretch for one year, but the relevant metric isn't whether Coal India meets its targets, it's how close it comes.

The company's chairman, AK Jha, said last week the aim is to ramp up output by 50-55 million tonnes annually for the next three years, which would allow for imports to decline.

Mr Jha told a conference that India's total domestic output last fiscal year was 730 million tonnes, but consumption was 965 million tonnes, with imports of 235 million filling the gap, the Economic Tomes reported on Aug 26. "Out of this, 115 million tonnes of imports is inevitable since it is coking coal not abundantly available in the country. The rest, around 120 million tonnes, can be replaced by Coal India's production," the newspaper quoted Mr Jha as saying. REUTERS