Coal imports seen rising on transport constraints

Contrary to the Centre’s plan to bring down coal imports, industries are seen to be sourcing more coal from foreign countries in FY19, thanks to the unresolved issue of inadequate transport mechanism to ferry the fuel from the mines to the manufacturing plants. “Coal import trend is expected to continue as power, cement and steel industries are expected to witness improvement in demand and capacity utilisation,” CARE Ratings said on Tuesday.

Though domestic coal production clocked an annual 2.5% increase by producing 688.4 MT in FY18, imports, at 213 MT, grew by 8.1% on the back of sustained demand from steel sector for coking coal and steady demand from the power and cement industry, the agency added. During the last 12-months, average global coal prices have been in the range of $70-106/tonne, peaking in January, 2018.

To control coal import, CARE Ratings said that there is an immediate requirement to auction private coal blocks of coking and steam coal for 50 MT per annum.

As reported by FE earlier, after the Supreme Court cancelled 204 captive coal block licences in 2014 saying these had been allocated in an illegal and arbitrary manner, 89 of the cancelled blocks have been reallocated so far and only 28 of these are producing coal right now.

Coal India Ltd