Indian Coal Imports Growing at 17 Per Cent Annually

Indian coal imports have recorded a compounded annual growth rate (CAGR) of 17.1 per cent between 2003 and 2008. Simultaneously, exports of coal have come down during this period with a CAGR of -0.1 per cent, according to a report published by the credit rating agency ICRA Ltd.

Import of all types of coal — coking coal, non-coking coal as well as coke — are growing mainly because of the low calorific value of domestic coal and shortage in domestic production.

According to the report, despite a shortage in domestic supply and the growing trend in imports, large-scale imports of thermal coal by the power sector have been ruled out for a number of reasons: the boilers of many existing power plants are not designed to handle coal with a high calorific value, the inadequate handling facilities at Indian ports, the volatility of international coal prices, high ocean freight rates, foreign exchange risks and an inadequate inland transport infrastructure.

However, coking coal used by the steel sector is expected to further go up, particularly in view of forthcoming new steel capacities. The ICRA study has pointed out that the coking coal supplied by Coal India Ltd to the steel plants of Steel Authority of India Ltd from the coking coal reserves at Jharia and West Bokaro Coalfields have deteriorated steadily and now has an ash content of around 18-20 per cent as against an ash content of 9-10 per cent in imported coal.

The report further pointed out that the steel manufacturers import around 50 per cent of their coal requirement and 95 per cent of India’s imports are from Australia.

Source: The Hindu Business Line