India thirsty for energy
By John Miller, Editor
Much is said about China driving recovery from the global financial crisis (GFC) but India is also playing a big role as its thirst for energy continues unabated.
Domestic coal production is being driven up incessantly but it is still not nearly enough and imports from India's major foreign suppliers Indonesia and South Africa are increasing. India is also increasingly looking at other overseas sources, including Australia, Mozambique, Botswana, Russia, Mongolia and the Americas.
An indication of the growth comes from South Africa which in June shipped 1.2 million tonnes of thermal coal to India and in July 2.1 million tonnes, or 35% of its thermal coal exports.
Of total South African 2009 coal exports of 60 million tonnes, 41% was shipped to Asian markets and of this 29% was for the Indian market. In 2008 18% was exported to Asia with India accounting for 11%.
India's annual economic growth has averaged 7%, slowing slightly to 6.5% during the GFC. Industry now makes up 28.2% of GDP, making it the second biggest GDP component, and increasing the demand for fossil fuels.
Although India has the world's fourth-largest thermal coal reserves, they are being depleted at a rapid pace at the same time the industry has been hobbled by bureaucracy that has stalled the award of mining contracts. This month India's Parliament finally amended the Mines and Minerals Development and Regulation Act of 1957, which should speed the auction of coal blocks.
While coal consumption has soared in the construction sector, it is power that takes most of it. Some 70% of the country's electricity is generated by coal despite moves into renewable energy sources. India has set a target to generate 78,000MW in new capacity in the 11th five year plan (2007-2012) and another 100,000MW in the 12th FYP.
Although state-owned Coal India Limited (CIL) has done well to raise domestic coal output, it has not been enough to meet demand. CIL has floated a tender to import 6 million tonnes, the company's first import tender since its inception in 1975. CIL expects to import 50 million tonnes in the next few years and has set aside US$2 billion for such investments.
Last month power producer NTPC floated a tender for direct procurement of 14.5 million tonnes, valued at about US$1.5 billion. The company will import coal directly for the first time. It is also looking at acquiring assets abroad, having earmarked nearly US$4 billion for the purpose.
Private firms are also looking overseas. After securing Linc Energy's Galilee thermal coal property in Queensland, Adani Power has signed a long-term pact with Indonesia's PT Tambang Batubara Bukit Asam.
Tata Power has forecast that its annual imports will surge to 22 million tonnes by 2014, from 5 million tonnes last year. The company already owns 30% of PT Kaltim Prima Coal in Indonesia with plans to procure 12-14 million tonnes of coal for its 4000MW Mundra Ultra Mega Power Project.
Essar Energy finalized a deal to buy Aries coal mines in Indonesia following the acquisition of the US-based Trinity Coal for US$600 million and Reliance Power has bought three coal mines in Indonesia for more than US$1.5 billion.