by ajoy k. das
With Indian coal imports increasing 9% during the first half of the current fiscal year, the Indian government is attempting to reduce dependency on shipments from Australia and support sourcing from U.S., Canada and Russia, particularly for coking coal grades.
Indian coal imports during April-September 2019 were 127 million metric tons (mt), up 9% over the corresponding period of the previous fiscal year.
The government reckons that despite the projected increases in domestic coal production, the upward trend in imports was expected to sustain and nudge importers to diversify sources for the inward shipment of the dry fuel and lower dependency on suppliers in Australia and Indonesia. To this extent, the government is pushing to bolster the trend among Indian importers of higher sourcing from Canada and the U.S. and engaging in bilateral talks with Russia to include the latter as a favored market to ship in coal, particularly coking coal.
Officials in the federal Ministry of Coal pointed out that in terms of volumes shipments, Australia and Indonesia continued to remain the highest. Imports from U.S. and Canada have been recording the highest growth rates in recent years.
Government data showed that imports of thermal coal from the U.S. by India during 2018-2019 grew by 24%, the highest percentage compared to all other sources by country. Imports from Indonesia for thermal-grade coal increased 18% during the year, government data showed, while shipments from South Africa fell 19% during the year.
Domestic steel producers were also showing an increased preference of shipping in coking coal from the U.S. and Canada, with imports from Canada growing 8% during 2018-2019 at 4.29 million mt or 8% of total imports into the country. Similarly, coking coal imports from the U.S. during the year also increased 8% at 4.13 million tons.
Government officials expect coal imports from the U.S. to double to 8 million mt over the next two fiscal year, while shipments from Canada have the potential to increase to 7 million mt during the same period.
Coal Ministry officials said coal shipments from the U.S. registering the highest growth rate was not surprising as it was a direct fallout of the India-U.S. Strategic Energy Partnership signed last year aiming to increase bilateral trade in the energy spectrum of liquefied natural gas, crude oil and coal.
U.S. President Donald Trump administration’s support to its domestic fossil fuel industry particularly coal mining, coupled with the Strategic Energy Partnership, is providing the framework for Indian importers looking to increase inward shipments of thermal and coking coal from U.S. In fact, India Coal Minister Prahlad Joshi strongly pushed state-miner Coal India Ltd. (CIL) to move aggressively to conclude “advance agreement,” or long-term contracts with U.S. coal mining companies to ensure coal supplies at fixed rates.
Government officials pointed out that U.S. coal exporting companies had sweetened deals by compensating the differential Australia-India freight rates and higher U.S.-India freight rates, increasing cost competitiveness of sourcing coal from the U.S.
