India’s rankings of its most preferred source of coal imports are expected to change dramatically this year, with South Africa poised to emerge as the second-largest supplier, officials in the world’s largest coal miner, State-controlled Coal India Limited (CIL), and the country’s Coal Ministry, said.

Explaining the rationale behind the expected change in rankings, the officials pointed out that South African policies for exports remained favourable, while the out- look for coal sourced from Indonesia and Australia were turning less rosy.

Last week, economic counsellor of the High Commission of South Africa in India, Stefanus Botes, confirmed that South Africa was not considering an export tax on coal.

Indian officials said that coal imports were expected to surge to levels of around 165-million to 180-million tons during 2013/14, up from 135-million tons in the previous year and, in view of the favourable coal trading policies of the South African government, the country could replace Australia as the second-largest supplier of coal to Indian thermal power plants.

In fact, for its maiden import shipment of coal in the next few months, CIL was making an extra effort to scout for South African supplies.

It was pointed out that changes in the pecking order of suppliers of India’s imported coal were in line with last year’s emerging trend, which saw the number of imports from South Africa increase the most, while, in volume terms, the largest shipments were still sourced from Indonesia.

India’s coal imports from Indonesia recorded an increase of 40%, at around 77-million tons in 2012/13, followed by a 2.8% increase from Australia at 26.8-million tons, while the biggest growth was seen from South Africa, which increased by 43% to 17.4-million tons.

If the current softening in international coal prices were sustained, volume shipments from South Africa could increase substantially, offsetting the higher freight costs for South African imports when compared with Indonesian sources.

However, Coal Ministry officials added the rider that the bulk of Indonesian coal imported by Indian thermal power plants was of much lower gross calorific value than coal available from Australia or South Africa, and that volume shipments from these countries may not change if current preferences persisted.

The propensity to import low-grade coal for thermal power plants may, however, change, with the Indian government proposing setting up independent quality control monitors to curb the import of low-grade coal, as this carried the risk of faster degradation of thermal power plant boilers.

CIL would shortly be inviting international agencies with expertise in coal sampling to set up coal quality checks for both imported and domestically produced coal.