One of the "drums" I've been banging for awhile is coal exportable to India.
The case is pretty clear. India's domestic coal prices are fixed at a level that doesn't make much profit for local miners. The result has been underinvestment and flagging supply.
The situation has grown dire. According to India's Central Electricity Authority, 24 of 84 coal-fired plants across the nation are running at "critical" coal supply levels. Meaning these facilities have less than 7 days of coal supply in inventory.
That's nearly 30% of India's coal-fired power running on fumes. Even more concerning, 12 of those 24 low-coal plants are at "super critical" levels. With less than 4 days worth of coal supply on hand.
Some of these plants are suffering from transportation bottlenecks. Rail infrastructure is simply insufficient to get the needed amount of coal to site. But many are straight-up unable to procure the supplies they need anywhere in the country.
Which is why the government has been pushing lately to increase coal imports. Particularly through direct ownership of coal mines around the Indian Ocean perimeter.
Case in point, last week state coal power NTPC announced it is considering spending top dollar for a stake in two coal mines in Indonesia. The latest in a series of bids by Indian companies for coal assets in that nation, along with Mozambique, Australia and even America.
This is a big tailwind for coal. Although not all deposits will benefit equally. There is increasingly a premium being attached to coal assets within India's "area of influence". Anything that can easily be shipped via the Indian Ocean is going to get a lot of love going forward.
Plays on this? How about Madagascar, which has proven coal fields near to India but has gone largely untouched by investors due to the political problems a few years back. With the situation now improved, might be worth a re-visit.
By. Dave Forest of Notela Resources