KOLKATA (miningweekly.com) – India’s Coal Ministry and the country’s largest miner and coal supplier Coal India Limited (CIL) have taken a differing strategic stance on ways to tide over the increasing domestic shortage of coal and rising imports.

CIL, which accounts for over 80% of domestic coal supplies prefers to focus on leveraging coal assets at home to increase production for raw-materials starved thermal power plants, while the Coal Ministry has called for the aggressive acquisition of coal assets overseas to meet India’s mounting demand from the energy sector.

“We need to be aggressive in acquiring coal assets overseas to establish long-term energy security,” Coal Minister Sriprakash Jaiswal said, citing the example of the ministry’s facilitation in CIL’s acquisition of assets in Mozambique.

However, CIL had taken a contrary stand on the long-term strategy of increasing production and securing energy security for thermal power plants. “Our unrelenting focus should be on domestic production. Just because we have money, we should not be focusing on overseas acquisitions,” CIL chairperson S Narsing Rao was quoted as saying in the local media.

CIL was on target to achieve output of 470-million tons during the twelve months ending March 31, 2013, and had set a target of producing 487-million tons during 2013/14.
Indian coal imports during December 2012 were up 45% over the 14.2-million tons imported in December 2011, an indication of the shortage faced by thermal power plants in the country.

Imports during November 2012 were recorded at 13.8-million tons, up 73.6% over that of November 2011.

According to the Coal Ministry, total production during 2012/13 was estimated at 574.4-million tons with a forecast shortfall of 192-million tons during the year.

According to Rao, India took 15 years to achieve an incremental increase in coal production of 180-million tons and the same amount of incremental production would now have to be achieved within the next five years.

However, coal sector analysts were not convinced of the miner’s ability to achieve a task of such magnitude.

As a majority government-owned company, CIL’s predilection was towards securing coal assets through bilateral government-to-government negotiations, rather than competitive bidding for the assets.

However, barring countries like South Africa, mature markets such as Australia and the US, did not offer opportunities for securing coal assets though such government-to-government initiatives, CIL officials said.

CIL, despite a free reserve kitty of an estimated $1.9-billion had not had much success in acquiring coal blocks overseas, except for the two blocks in the Tete province in Mozambique, which it secured in 2009 and on which it only recently expedited exploration work.