Protests in India Could Curtail Coal Production

Officers at India’s state-owned coal company plan to go on a three-day strike over pay, which could cut into India’s coal production. Coal India, the world’s largest coal producer, is responsible for 80% of India’s coal output. Shortages are a constant problem for India, which is becoming more dependent on foreign suppliers for coal. "Coal Mines officers' Association of India has served a strike notice ... against non-finalization of performance related pay, new pension scheme and other demands," the company said in a statement, according to Reuters.

Coal is India’s primary source of energy. India has the fifth largest coal reserves in the world, but struggles to produce enough coal to keep the lights on. Employee strikes, permit delays, and general inefficiencies plague the coal giant, which often misses its production targets. The coal sector is dominated by two state-owned companies, including Coal India, which more or less have a monopoly on the market.

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The impacts of the strike could be blunted by the fact that only 19,000 of the company’s 349,000 employees are officers. But the pending strike could knock off 1.5 million tonnes-per-day of coal production, putting strains on domestic supplies. India, already the world’s third largest importer of coal, may have to turn to international markets for more coal.

And it has had to do so more and more every year. There is an enormous amount of pent up demand with hundreds of millions of people still without power. Demand has increased about 7% per year, but production has not kept up. That forces the country to rely on imports. Coal imports jumped to 152 million tonnes in 2013 from a year earlier, a 21% increase. On average, imports have grown by 13% per year since 2001, according to EIA data.

By James Burgess of Oilprice.com