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The Importance of Coal to India's Economy

India’s coal reserves have been assessed at about 286 billion tons this year, about 3.25 percent higher than the previous year’s 276.8 billion tons, according to a published report.

Citing the National Inventory on Indian Coal Resources published by the Geological Survey of India, the Indian newspaper Business Line reported that of this, the Geological Survey estimates proven reserves to be 114 billion tons, or 40 percent of the total reserves. The latest proven reserves represent a 3.6 percent increase over the previous year’s 110 billion tons.

According to the report, at current level of production of about 550 million tons, the coal reserves will last for more than 100 years, Coal Minister Sriprakash Jaiswal told the upper house of the parliament (Rajya Sabha) in a written reply.

However, exploration is a continuous process and new resources get added year on year, Jaiswal was quoted as saying.

How Coal Plays Into Indian Metals Production

India is the third-largest producer of coal in the world. However, the country’s domestic consumption is large and as a result, India net imports coal to meet the needs of power companies, steel mills and cement producers.  Furthermore, non-coking coal reserves make up about 85 percent while coking coal reserves are the remaining 15 percent.

India’s coal demand is expected to increase multifold within the next five to 10 years, due to the completion of ongoing power projects, and demand from metallurgical and other industries.

Government-controlled Coal India Limited (CIL) dominates the domestic coal supply market with an 80 percent market share, although some industrial consumers, typically in the power and steel sectors, have access to captive mines.

CIL’s non-coking coal production has grown by 3.7 percent annually between 2007 and 2011, below the rate of coal-fired capacity additions (7.2 percent annually over the same period). Its production target for 2012 is 452 million metric tons, only marginally up from 431 million tons recorded in the 2011 fiscal year.

Despite all this, the Indian coal ministry projects a coal supply shortfall of up to 142 million tons in 2012.

The Big Picture

Estimates put proven reserves worldwide at more than 847 billion tons. There are recoverable reserves in around 70 countries, with the biggest reserves being in the US, Russia, China and India. Other important coal producing countries include Australia, India, South Africa, and Russia.

China is the largest producer of coal in the world, while the United States contains the world’s largest ‘recoverable’ coal reserves (followed by Russia, China, and India).

India has the fourth-largest reserves of coal in the world. Coal deposits here occur mostly in thick seams and at shallow depths. Indian coal has high ash content (15-45%) and low calorific value.

Coal accounts for about 67 percent of the total energy consumption in India. The energy derived from coal in India is about twice that of energy derived from oil, as opposed to the rest of the world, where energy derived from coal is about 30 percent lower than energy derived from oil.

The use of beneficiated coal has gained acceptance in steel plants and power plants located at a distance from the pithead.

Growth Should Continue

The World Economic Outlook released by the International Monetary Fund confirms the likely continued high growth trajectory of Asia.  Along with China, India is likely to be an important part of this economic growth.

The International Energy Agency has consistently demonstrated India’s continued status of being a key consumer of fossil fuels, both now and in the future.

By. TC Malhotra

MetalMiner is the largest metals-related media site in the US according to third party ranking sites. With a preemptive global perspective on the issues, trends, strategies, and trade policies that will impact how you source and/or trade metals and related metals services, MetalMiner provides unique insight, analysis, and tools for buyers, purchasing professionals, and everyone else for whom metals and their related markets matter.

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