Friday, October 1, 2010

Huge Indian Demand to Drive Global Coal Export Boom

image India, Asia's third largest economy is bracing itself for a huge import of coal in order to fulfill apart of its ever increasing energy requirements as the country plans to add a capacity of 100,000 MW of power during 2012-17. India faces peak hour power shortage of nearly 14 % as of today and sector firms have lined up to raise funds as they expand generation and transmission capacity to satisfy a rapidly urbanizing population and rising industrialization.

India's government has meanwhile promised to modernize its ports to accommodate larger vessels and make transporting iron ore and coal to roads and railways more efficient. Coal powers 75 percent of India's electricity, but local output lags swelling demand. Imports are expected to grow to 100 million MT in 2011/12 from 80 million MT now.

Coal is a complex natural resource that is primarily used to fuel power or cement plants, two commodities that are expected to see increases in demand as global populations increase and per-capita income in developing nations increase.

In fact last month, India's Adani Enterprises agreed to invest $1.65 billion in an Indonesian coal port and railway project, and acquired stake in Australian miner Linc Energy's Galilee project for $2.7 billion.

Increased demand for coal is already being seen in China, which accounts for nearly half of global coal demand and being used for power generation and metallurgical coal to produce steel. Now with an increase in demand in neighboring India, the two Asian neighbors can consume a lot of coal put together to fulfill their economic dreams of industrialization and growth.

Meanwhile Coal India, the world's largest coal producer, plans to launch a public offer of its shares next month, the biggest ever in the country. The company made a net profit of 98.294 billion rupees ($2.17 billion) in 2009/10 ended in March on revenues of 525.922 billion rupees.

In 2010/11, India's coal demand is seen at 656.31 million MT, while indigenous availability is estimated at 572.37 million MT.

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