INDIA is set to overtake China as the world’s biggest importer of thermal coal this year as Indian power producers seek more fuel to meet ambitious government requests to boost electricity capacity across the sub-continent, where economic growth is matching that of its northern neighbour, China. India’s government would like to see $36 billion worth of new power plants established to meet demand but lack of domestic coal means a number of plants have been put on the back-burner.

This, in turn, has caused a recent slowdown in growth of the $1.7 trillion Indian economy as power and manufacturing output slowed, prompting the government to urge coal producers, including state-run Coal India, to plug the domestic shortfall with thermal coal from overseas sources. India is aiming for an annual average growth rate of 9% during the next five year period starting April 1 … growth that will bring increasing demand for power and steel, and therefore the coal that is needed for both.

India’s deficit in coal supply is likely to increase much faster than the proposed 6% increase in domestic supplies during 2012 and, therefore, purchases from abroad could exceed 118 million tonnes in 2012, compared with the forecast of 102 million tonnes for China. A number of economic experts say that China’s power consumption growth rates are starting to come off the highs of recent years while domestic coal production and transport capacity growth are improving. Power consumption in China grew 11.7% in 2011 and is expected to increase 8.5% this year while the nation is expected to add 200 million tonnes of coal production capacity compared with 95 million tonnes in 2011. Mongolia will also play an increasingly important role in supplying coal to China, which means that shipments from Indonesia, Australia and Africa will be diverted to India.

As the world’s largest thermal coal exporter, Indonesia is well placed to benefit from India’s increased demand and despite increasing local demand as well, most of the island nation’s coal producers are looking to expand existing projects and develop new ones, while exploration continues unabated.

Indonesian exports to China have been increasing on a monthly basis, although these increases have slowed in recent month, while exports to India are surging. Last November Indonesia shipped 33.476 million tonnes of coal, which was slightly higher than in October. China took 13.23 million tonnes, a slight increase on October, while exports to India jumped 66.41% to 6.59 million tonnes, a trend that is likely to continue during 2012.

Dozens of Indian companies have invested in coal mines and coal companies in Indonesia in a bid to secure supplies for their plants in the long term and this investment flow shows no signs of slowing One of Indonesia’s largest producers, Berau Coal, says that India will be the big market for its low calorific coal in 2012.

 

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Sylwia Pryzbyla, Editor

Sylwia Pryzbyla
Editor, ASIA Miner and Australian Editor, E&MJ
[email protected]

Sylwia Pryzbyla has more than two decades of experience in media and publishing industries.