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India Coal Industry 1H11
Emerging Markets Direct, Nov 2011, Pages: 44
India has the fourth largest reserves of coal in the world: approx. 197 billion tonnes. It is estimated that coal required by the power utility sector will grow at a CAGR of around 10% to 2011-12. Private coal washeries have rapidly increased the production of washed non-coking coal in India during 2002-03 to 2006-07, while high coking coal demand by the Indian steel industry and a low reserve base has boosted the import of coking coals. Coal demand from the Indian cement industry looks bright, and it is expected that volumes required by the industry will rise steadily from 2007-08 to 2011-12. Coking coal needed for steel production is expected to surpass 85.34 million metric tons in 2011-12. In total, the energy derived from coal is twice that derived from oil in India, compared to the rest of the world where energy derived from coal is about 30% lower.
India Coal Industry 1H11 provides a comprehensive overview of the sector, including coal generation performance, plant loads, coal supply & demand situation, consumption, installed capacity, distribution, policy framework, and regulatory environment. The report also covers recent government policy initiatives, coal tariffs, industry SWOT, market outlook, plus profiles and SWOT analyses of the industry's leading players.
A resurging post-economic crisis growth and increasing pressure on natural resources (pushing the energy prices to record levels) are two dominant themes of global and local economies. The pressure on resources has been exacerbated further by natural disasters like the earthquake and tsunami in Japan, floods in Thailand and political unrest gripping the whole of the Middle East and North Africa. The impact of these events has percolated into the Indian economy as well. As a result, Indian businesses have come under increasing cost pressures, even as they enjoy healthy growth.
Economic recovery, which had gained momentum in the first half of FY11, started showing signs of moderating in the second half. The biggest hindrance to growth momentum however, has been high inflation. Inflation refuses to abate and has forced RBI (Reserve Bank of India) to pursue monetary tightening measures even at the cost of growth. Rising energy prices and interest rates will continue to pose a challenge for businesses in the near future. Despite these short term challenges, the overall economic sentiment remains healthy and the report authors expect a good growth rate for the next year as well.
Today, India is among the fastest growing economies in the world. Energy is one of the major inputs for the economic development of any country. In developing countries, the energy sector assumes a critical importance because of the huge investments required to meet them. Coal dominates the energy mix in India, contributing over 50% of the total primary energy production. Its expected dominance as the primary source of energy almost guarantees that there will be no dearth of markets for it in the 21st century.
India is presently the third largest coal producing country, after China and the United States. However, domestic production is not sufficient to meet its needs. Indonesia, Australia and South Africa are the key countries catering to India’s import needs. There is also a trend of Indian companies acquiring overseas coal assets to ensure security of coal supplies.
Recent developments have been very positive for the Indian coal sector. CIL’s (Coal India Limited) attempts at acquiring overseas coalfields will lead to greater coal security for the growing energy needs of the country. Fuel Supply Agreements (FSA) will remove the supply uncertainties faced by the coal consuming industries. Overall, the sector is on a positive track and is expected to remain so in the years to come though challenges remain, especially with regards to bottlenecks for captive coal mining, opening up the sector for full private participation and coal transportation infrastructure. The phenomenal growth in demand for coal is attributable to India’s high economic growth.
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