India aims to increase its domestic coal production to 1.2 billion tonnes by 2023-24 to reduce imports and bridge the demand-supply gap, according to a coal ministry statement. This is a near 75% jump from what the country currently produces.
To achieve the target, the government has rolled out a number of steps including the commercial auction of coal on a revenue share mechanism and single-window clearance to boost output and rolling auction. S&P Global Platts reported that the government also aims to add domestic production capacity through the approval of new projects and the expansion of those planned for the future.
Earlier, state-run Coal India Ltd., or CIL, had set a target to produce 1 billion tonnes of coal by 2024. Analysts, however, believe the target is ambitious given that the private sector has expressed limited interest in commercial mining auctions so far.
However, mining capacities were enhanced after India allowed the sale of additional coal from captive blocks in 2021. This led to a 9.01% increase in domestic coal production in April-November 2021 to 447.54 million tonnes against 410.55 million tonnes in the corresponding period of 2020, the coal ministry statement said.
India’s coal demand stood at 905.88 million tonnes in 2020-21, with domestic supply contributing 690.89 million tonnes and imports at 214.99 million mt, the ministry data showed.
Stating that the gap between demand and domestic supply cannot be bridged completely as there is insufficient availability and reserves of prime coking coal in the country, the ministry said coal for blending purpose is also imported as this cannot be fully substituted by domestic coal given that the country has limited reserves of high grade coal.
Coal stocks fell to critically-low levels in October 2021, with coal burn sufficient for only four days on an average across utilities. India deferred imports due to bullish and volatile seaborne prices. “The overall imports of coal also reduced to 147.14 million tonnes in the period of April-November 2021 compared to 165.57 million tonnes during the corresponding period the previous year, a decrease of about 11.13% which has resulted in significant savings of forex reserves this year, especially when coal prices are at a high level in the international market,” according to the statement.