Singapore — India is aiming become self-sufficient in thermal coal from financial year 2023-2024, said Pralhad Joshi, the Union Minister of Coal and Mines Tuesday while chairing a brainstorming session organized to find a way forward for the coal sector in the western Indian state of Gujarat.
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"India will soon become self-sufficient in mining coal for thermal power plants as Ministry of Coal coordinates with Indian Railways and Shipping Ministry," said Joshi.
"They discussed means to achieve 1 billion mt coal production target by Coal India Limited by Financial Year 2023-2024 in the session," said a source close to the matter.
India's financial year runs from April 1 to March 31.
The minister also proposed that Coal India could generate 5 GW of solar power by financial year 2023-2024, which could potentially diversify a total of 50 million mt coal by 2030 enabling a sustainable energy mix for the country.
However, the reaction from market participants were mild and said bottleneck for coal self-sufficiency lies with logistics constraints.
"It is an ambitious political statement as it is more expensive to move Indian domestic coal due to limited railway availability in inland India as compared to importing seaborne coal," an India-based trader said.
Most investment projects on coal railway were said to be in the form of joint venture partnerships with Indian companies with the absent of major international miners, the trader said.
Another Singapore-based trader said that self-sufficiency of Indian domestic coal is only possible if the Indian government invests heavily on new logistics infrastructure.
"Production is never a big issue in India," he added.
As of January 31, 2020, Coal India produced 451 million mt coal in FY 2019-2020, data from trading house Iman Resources showed last Wednesday.
Total thermal coal import in 2019 in India was 181.93 million mt while coking coal import was 48.84 million mt, it added.
However, for metallurgical coal, India still have to rely heavily on imports as domestic India coking coal "quality and quantity" is not ideal, an Indian buyer of seaborne metallurgical coking coal said.
"This is merely a policy and the government will not restrict imports of thermal coal in my opinion," he said, adding that such policy is "never" likely to be implemented for coking coal. Indian users have increasingly over the years look towards metallurgical coal diversification to obtaining coals from Australia to US, Canada, Mozambique and Russia.
S&P Global Platts assessed 5,000 kcal/kg GAR Indonesian coal and 4,200 kcal/kg GAR Indonesian coal at $59.70/mt CFR West India and 43.80/mt CFR West India, respectively, Tuesday.