VMR Mining Update: buy coal

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A coal price spike last year, driven by a Chinese change in regulation that capped local mining operations, has shown how easily markets can swing from oversupply to shortfall.

Many a swan song has been sung for thermal coal markets as renewable power generation and a push towards using more natural gas have gained traction. Yet a coal price spike last year, driven by a Chinese change in regulation that capped local mining operations, has shown how easily markets can swing from oversupply to shortfall. While many analysts and investors see the long-term outlook for coal as bleak due to policies and technological advances that favour cleaner natural gas and renewable in power generation, the shorter-term outlook for the industry has seen a sharp reversal of fortunes.

This year, strong demand growth in Asia’s emerging markets will create a supply shortfall for the first time in at least half a decade. Consumption could even soon rise past the 2014 peak, according to Asia’s largest commodity trading house, Noble Group. Despite coal’s high levels of pollution, utilities and governments in emerging economies, at least for now, largely prefer coal-fired power stations over other fuels including natural gas in order to meet soaring energy demand. While gas and solar prices have fallen sharply, coal remains one of the cheapest, easily available, and most easily maintained sources of electricity.

More than 10 gigawatt (GW) of coal-fired power stations were sanctioned for construction last year in Southeast Asia, where most new demand stems from, compared to just 4.6 GW of gas-fired projects, according to energy consultancy Wood Mackenzie. “New markets like the Philippines and Vietnam are starting to seek our coal,” the chief executive of Indonesian coal miner PT Bukit Asam, Arviyan Arifin, told Reuters this week. Rodrigo Echeverri, head of thermal coal analysis at Noble, believes this year’s global thermal coal market will be 13 million tonnes short of meeting 911 million tonnes of demand, compared with a broadly balanced market in the last three years.

The tightness is a result of falling output after some companies including U.S. giant Peabody Energy, filed for bankruptcy, and other miners cut output at unprofitable mines. At the same time, Chinese imports grew by 43 million tonnes as a result of restrictions on local production, while new coal-fired power plants were commissioned in countries including Vietnam, Malaysia, Philippines, Taiwan, Echeverri told a conference in South Africa this month. To meet the imminent shortfall, some miners have again begun ramping up output. Indonesia, the world’s biggest thermal coal exporter, said this month it is targeting production of 470 million tonnes in 2017, compared with its previous goal of 413 million tonnes and up more than 8 percent on last year.

There are also signs that Australian thermal coal output is picking up, with exports from Queensland hitting a record last year. Even so, the shortfall in supply could reach 28 million tonnes by 2020, meaning more new mines would need to be opened by the mid-2020s to meet demand, Echeverri said.

COAL OUTPERFORMS

Most commodities, including thermal coal, crude oil, copper or liquefied natural gas <LNG-AS>, have seen price rises since early 2016 as part of a broad-based rally. Australian thermal coal has performed best, rising 53 percent price versus 48 percent for oil, 25 percent for copper, and just 8 percent for Asian LNG. Because of this, companies focusing on seaborne coal supplies fared better than other miners or oil and gas producers.

“For pure coal players, the rise in prices from June 2016 … provided the catalyst for improved export sales margins given that many producers were actively managing their production costs,” said Patrick Markey, managing director of commodity advisory Sierra Vista Resources in Singapore. his reversal of fortune of an industry that was deeply in trouble just a year ago has been noted by investors.

Shares in thermal coal specialists like Australia’s Whitehaven Coal or Indonesia’s Adaro Energy, are far outperforming their peers in the oil and gas sector like Australia’s Woodside Petroleum, Royal Dutch Shell or Chevron. Many oil and gas firms are grappling with cost overruns and production delays at facilities such as Chevron’s Wheatstone condensate and LNG plant or Shell’s Prelude floating LNG unit.

Longer term, the rise of cheap natural gas and increasingly competitively priced renewable power generation is expected to eat away at coal’s power market share.

“We see clear winners for the next 25 years – natural gas but especially wind and solar – replacing the champion of the previous 25 years, coal,” the latest outlook from International Energy Agency (IEA) says. In the meantime, producers are benefiting from Beijing’s ongoing drive to remove dirty and inefficient mines, which is keeping seaborne coal prices in a sweet spot. “Around $80 is a really, really good price for Australian mines,” said Peter O’Connor, resources analyst for brokerage Shaw and Partners in Sydney.

(Source: Financial Express, February 10, 2017)

Virginia Mining Resources bring to you last week developments and update of Coal India Limited.
please check it out below:

Coal India Ltd plans to acquire coal assets overseas

State-run CIL is exploring coking coal assets overseas as the country is faced with constraints of techno-commercially viable domestic metallurgical coal reserves, Parliament was informed today.

“CIL (Coal India Ltd) is scouting for acquiring coking coal assets abroad, as India is faced with constraints for techno-commercially viable domestic coking coal reserves,” Coal and Power Minister Piyush Goyal said in a written reply to Rajya Sabha.

“The recent spurt in global coal prices, particularly for coking coal, is expected to create an encouraging scenario for such acquisition process,” the minister said.

Since CIL, at present does not have any asset abroad, the comparative analysis between coal mines in India and coal mines abroad can not be ascertained, he added. The state-owned miner had surrendered two prospecting licences held by its subsidiary Coal India Africana Ltd in Mozambique.

CIL is looking to appoint a merchant banker to assist it in acquiring assets overseas so as to enhance the nation’s energy security.

Coal India production grows 5.5 percent in January

Coal India Ltd (CIL) on Thursday reported that its production grew by 5.5 percent to 55.99 million tonnes (mt) in January as compared to 52.86 mt in the corresponding month last fiscal, but the production during April 2016 to January 2017 remained flat.

According to provisional data, the production stood at 433.76 mt, up by a meagre 1.7 percent during the first ten months of the current fiscal (2016-17). It achieved 91 percent of the target which was set at 478.57 mt for the period.

CIL, which produces 84 percent of the country’s coal production, was targeting 61.04 mt during the last month of the current fiscal, achieving 92 percent of the target. It also reported that its off-take during this period was up by a marginal 1.3 percent at 443.13 mt as against a target of 489.71 mt. Its off-take for January stood at 51.35 mt achieving 92 per-cent of the target.

In 2015-16, the state miner produced 538.75 mt of coal against a target of 550 mt and its off-take was at 534.5 mt. During the current fiscal, the coal production target has been pegged at 598.61 mt is expected to be 660.7 mt in 2017-18.

The company envisaged production of 908.10 mt in 2019-20 with a CAGR (Compound Annual Growth Rate) of 12.98 percent with respect to 2014-15.

In its latest annual report, the coal-mining behemoth said it would invest Rs 7,765 crore as capital expenditure and Rs 5,069 crore in various other projects in 2016-17.

(Source – Assorted with inputs from PTI & IANS, 02-07, February-2017)

Global miners, particularly Canadians, are showing increasing signs of optimism as commodity prices are on the rise, shallow growth is returning to different end markets, and most are in better cost positions than in the recent past, the annual “Tracking the Trends” report by Deloitte released Wednesday shows.

However challenges remain, and the industry is still likely to have to deal with cyber-security threats, technological disruption and environmental issues, it warns.

“It is critical that companies are aware that with technological and digital disruption occurring across all industries, comes accelerated threats to the mining industry,” notes Phil Hopwood, Deloitte’s Canadian and Global Mining Leader.

As in the past years, the consultancy firm outlines the top 10 challenges miners are likely to face, as well as the possible solutions to them, which can be summarized as:

Cyber attacks and other threats: Mining companies are subject to a wide range of risks, and with an evolving threat landscape, leaders must strengthen their cyber-security programs.
Unlocking productivity through innovation: Think beyond driverless trucks, sensors and advanced analytics to reduce cost, streamline equipment maintenance and prevent safety incidents. Today, new technology such as drones, real-time modeling and geo-coding are driving the next wave of productivity gains.
Digital revolution: Miners must figure out how to turn the potential benefits of digital thinking into reality.
Improving shareholder value: Optimizing portfolios, strengthening M&A processes, sustaining focus on cost and making long-term investments are key to improving this performance.

Creating healthy and inclusive workforces: Miners need to recognize that productivity goes beyond reducing costs and streamlining processes: mental health, wellness and diversity should also be considered and addressed.
Operating in an ecosystem: Companies will need to shift from a go-it-alone mentality, to one that recognizes the value of operating within an ecosystem.
Creating a shared vision for the sector: To foster a shared vision for the mining sector, companies and governments could benefit from finding a middle ground that aligns interests and enhances cooperation when it comes to regulations.
Re-earning the social license to operate: Winning a social license to operate is especially difficult for miners in light of a number of recent, catastrophic mining accidents and as communities continue to raise concerns about the industry’s impact on the environment. By lessening their environmental footprint, miners can foster the community trust needed to regain their social license to operate.
Supporting strategic priorities: Industry leaders now understand the importance of adopting operating models that can help them respond to challenges and market volatility. Companies that took steps to strengthen their balance sheets in the latest round of cost take-outs are now considering how to align their operating models against these choices.
Adopting an integrated approach to reporting: With governments demanding greater levels of transparency, the sector is working to strengthen compliance and disclosure practices. By standardizing information, considering the benefits of over-reporting and reviewing IT systems to ensure consistent data measurement and reporting capabilities, companies can adapt to a steep change in the reporting environment.

No “one-fit-all” solution
Unlike in previous versions of Deloitte’s report, this year’s includes a wide range of case studies and sector-tailored recommendations.

“Companies that mine iron ore or thermal coal, for instance, have an entirely different outlook than those heavily weighted in precious metals,” the study acknowledges. “Diversified miners face different challenges than companies with a niche commodity focus. Major producers are planning for a very different future than the one that appears on the horizon of most junior explorers,” it notes.

However, the analysts conclude that while mining companies’ approaches to the future will (and should) differ, all of them need to be looking for the answer to one common question: “Going forward, where should we play and how can we win?”

The full “Tracking the Trends” report is available here.

(Source: Mining.com, February 02, 2017)

Worried over domestic coking coal price hike effected by state-owned CIL, the country's largest steel maker SAIL today said it is in negotiations with the miner on the issue as it is difficult for the company to absorb the increase.

"We are under negotiations with them and working model will come out," Steel Authority of India Ltd (SAIL) Chairman P K Singh told Press Trust of Indida on Coal India Ltd's recent hike in coking coal prices.

CIL arm Bharat Coking Coal Ltd this month increased the prices of coking coal by about 20 per cent.

Another subsidiary of the world's largest miner Central Coalfields Ltd has also increased price of metallurgical coal this month.

"SAIL are in dialogue with CIL. We have told (them) that at this stage it is difficult for us to absorb (the hike in coking coal price). They have agreed to form a committee," Singh said.

The panel which will be constituted will have members from both the state-owned firms.

SAIL too is a state-owned firm and is a prime consumer of coking coal as well as a major customer of CIL's metallurgical coal.

"We have an MoU with Coal India. Once we are in that MoU, that pact remains applicable for the entire financial year. MoU means we also have an assured offtake from Coal India and We take coking coal from them. We take domestic coking coal supply only from Coal India," Singh said.

According to an official, the price of various grades of coking coal of CIL varies between Rs 2,400 and Rs 5,050 per tonne.

Asserting that SAIL was unable to recover its variable cost of production, he said there was a lot of pressure on its operations.

On possibility of price increase by the steel PSU, he said "it will depend on market situation". Of its total requirement, SAIL imports 86 per cent of metallurgical coal, while the rest is sourced indigenously.

The steel PSU has existing captive coking coal production of nearly 0.5 million tonnes per annum.

The global coking coal price, which was at USD 80 per tonne in January last year, rose to USD 283 per tonne in December, Indian Steel Association Secretary General Sanak Mishra said.

However, in early January, global price of metallurgical coal came down to USD 193 per tonne, Mishra said.

(Source: Economics Times, Janaury 30, 2017)

Contract prices for coking coal have surged to their highest levels since 2011.

Coking coal is a crucial ingredient in the steel making process but prices for the December 2016 quarter were relatively low at $US200 per tonne.

Yet figures for this year's March quarter have been locked in at $US285, a jump research analyst Gavin Wendt said, was still being driven by Chinese buyers.

"We have seen tremendous demand strength out of China, much more significant really than the market had anticipated, certainly through the later price of 2016," he said.

"There was a feeling that we would start to see Chinese demand, economic growth and Chinese activity start to tail off a little bit."

Mr. Wendt attributed the continuation of such strong demand from the country to a range of issues, but outlined a drop in domestic Chinese production as the primary reason.

"Chinese authorities have tried to cut back on domes-tic coking coal production," he said.

"When you have a situation where China's steel production is still robust but there is less domestic coal being produced, the gap obviously has to be filled by imported coal."

Spot coking coal prices fall Meanwhile, spot prices are almost $100 less than those of the contracts.
In the second half of 2016, spot prices for coking coal prices more than tripled to $US300 per tonne, but have since fallen back to about $US180.

However, Mr. Wendt suggested those numbers could climb during future negotiations between industry stakeholders. He believed spot prices had fallen due to discounted products as mining companies locked in new buyers.

"That will probably adjust itself when producers sit down with steel mills to talk about march quarter pricing." The year ahead for coal Mr. Wendt was optimistic about coal production throughout 2017, and believed prices would remain strong for the first six months.

"I think we'll start the year on a very positive note and I think we'll probably see very strong prices during the first half of 2017," he said. "As for the second half... a lot of it depends on the overall uncertainty on the international scale, [particularly] what happens in the United States”, he added.

"There is certainly talk around there of significant expansion projects and industrialisation and infrastructure spending ... how that is going to be implemented remains to be seen."

(Source – Mining.com, 19-January-2017)

After 40 years long time India is getting ready to open up commercial coal mining to private companies for the first time in four decades, with the aim of shifting the world's third-biggest coal importer towards energy self-sufficiency.

Coal Secretary Mr. Anil Swarup said on Friday the government has identified mines it plans to auction, and is now finalising other terms such as eligibility criteria for companies to take part and whether and how to set up revenue sharing. He said a plan should be ready in the 2-3 months, setting a clear timeline on a plan that has previously only been vaguely marked out.

India has an ambitious plan to double its coal production to 1.5 billion tonnes a year by 2020, as part of Prime Minister Narendra Modi's push to bring power to 300 million people who live without electricity, and give a boost to manufacturing.

It would also support the government's efforts to develop eastern parts of the country, which are resource-rich and hold most of India's coal reserves but have lagged the western states in development.

State-owned Coal India is on track to produce 1 billion tonnes a year by the end of this decade, and India is counting on private firms to produce the remaining 500 million tones - which may prove a tough target to achieve.

As of now, only Coal India and a small government-owned company are allowed to mine and sell coal in India.

"It's imperative that India opens up the sector so that private companies can bring in new technologies and the efficiencies that we keep talking about," said Dipesh Dipu at energy-focused Jenissi Management Consultants. "But I don't think private companies will be able to produce more than 100 million tonnes this decade as the process has yet to start."

The move is likely to attract coal block bids from Indian conglomerates such as the Adani Group and GVK, but the government may find it harder to lure big multinational miners such as Rio Tinto, BHP Billiton, Anglo American and Peabody Energy. Rio Tinto did not respond to requests for comment.

Coal prices are at multi-year lows amid global oversupply, and foreign companies have faced obstacles to investing in India, such as problems in getting land and environmental approvals.

Some private companies also worry that the best quality mines would be left for Coal India.

FINALISING TERMS

Swarup was handpicked by Modi to lead a turnaround in the coal sector soon after the prime minister came to power in 2014.

Under Swarup's watch, Coal India has seen record production growth, and the government auctioned off a series of coal blocks successfully. Coal imports fell for a sixth straight month in December.

Until last year, India spent around $16 billion a year importing foreign coal, even though it sits on the world's fifth-biggest reserves of more than 300 billion tonnes.

Anil Swarup said there were still some aspects of the plan to bring in private players that needed to be examined carefully.

The government, for example, has to make sure that companies do not under-report sales if a revenue-sharing model is adopted, he said.

Companies can do that by selling coal to their units at discounted rates, and by calculating the government's share based on that instead of the market price.

Swarup declined to say where the identified mines were located. Most of India's coal is in the eastern states of Jharkhand, Odisha and Chhattisgarh.

(Source: Assorted With Economics Times, January 9, 2016)

Notwithstanding a sharp cut in the government's growth forecast at the fag end, 2015 will go down as the year when India emerged as the fastest-growing large economy, despite setbacks such as 12 months of negative export growth, another bad monsoon and roadblocks to the far-reaching goods and services tax regime.

In addition to growth, the economy also saw some positives. Global crude oil prices fell to the lowest levels in over a decade, checking the balance of payments from going awry, inflation rate remained more-or-less under control, despite spikes in food prices, and economic reforms got a big push, notably in the form of further opening up of a host of industries to foreign equity.

India's real GDP in the first half of the current fiscal grew at 7.2 percent as per official data, which was slightly lower in comparison to the GDP growth of 7.5 percent in the previous fiscal.

India's external position improved at the same time. Forex reserves are a little above $350 billion in November 2015 as compared to a little over $270 billion in July 2013. Net foreign direct investment (FDI) inflows have increased to $17 billion in the first half of 2015-16 in comparison to $15.8 in the same period last year. The second quarter's current account deficit logged at a level of 1.6 percent of GDP.

However, the global slowdown continued to weigh on exports, which have declined for 12 straight months. The government said this was also pulling down growth but felt the situation would improve in the coming months.

On the fall in the value of the Indian rupee, the finance ministry's mid-term economic review attributed it considerably to the major devaluation of the Chinese Yuan.

The year also began with India's changing the way it calculated its gross do-mestic product under a new series, though the controversy over the changed methodology employed refuses to die down with economists even terming it obscure.

Changing the base year to 2011-12 from 2004-05 in January, the Central Statistics Office said India's real GDP, that is adjusted for inflation, grew by seven percent in the first quarter of this fiscal, slower than the 7.5 percent expansion in the quarter before - but much higher than 6.7 percent registered in the first quarter of the last fiscal.

Mr. Arun Kumar, till recently a professor at Jawaharlal Nehru University here, told IANS that in view of negligible industrial growth, drought-like conditions in past years and no substantial increase in profits and wages, the new numbers fall flat from the point of credibility.

"Even input costs, that are now low with falling oil prices, were not low in the period 2011-12. Let the statistics office show the growth figures for up to 10 years prior to the base year for us to consider the new series seriously," Mr. Kumar said.

The midyear review released this month lowered the economic growth forecast for the current fiscal to the 7-7.5 percent range, from the previously projected 8.1-8.5 percent, mainly because of lower agricultural output due to deficit rainfall.

It also said there may be a need to reconsider next year's fiscal deficit target of 3.5 percent.

"GDP growth has been powered only by private consumption and public investment is a concern. The proposed wage hike for government workers may impact plan for next fiscal." The economy continues to send "mixed signals" over growth, while all economic indicators were not yet aligned in pointing to a higher trajectory of growth, it said.

India's eight core industries, representing major infrastructure sectors, grew at 2.3 percent in the April-September period of the current fiscal, compared to a rate of 5.3 percent in the same period of the previous fiscal - the fall in growth rate caused by lower expansion in electricity, coal and cement sectors and negative growth in steel and natural gas sectors.

Mr. Jaitley's first full union budget also announced an agreement earlier in the year with the Reserve Bank of India (RBI) that it constitute a Monetary Policy Committee to determine by majority vote on the pol-icy rate required to achieve the inflation target.

Meanwhile, RBI Governor Mr. Raghuram Rajan cut the interest rate in January for the first time in nearly two years and followed up with two other reductions to bring down the central bank lending rate to 6.75 percent.

Politics intervened during the year to prevent the enactment of India's most important reform of its indirect tax regime by way of the pan-India Goods and Services Tax ( GST) that the government has targeted for implementing from April next year, because the ruling NDA does not have the numbers to pass the constitution amendment bill in the upper house.
Highlights

Real GDP in first half of fiscal grew at 7.2 percent
India emerges as fastest-growing large economy
Forex reserves of over $352 billion as on the first week of December.
FDI inflows increased to $17 billion in the first half of 2015-16
Indian basket of crude oils fell below $40 a barrel
Foreign investment limits raised in defense, real estate and insurance, foreign equity in railways
Retail and wholesale inflation rates rose in November to 5.41 percent and (-)1.9 percent respectively, largely due to an increase in food prices
Infrastructure sectors grew at 2.3 percent in the first half of fiscal
Government lowers GDP growth estimate for fiscal by one percent to 7-7.5 percent

(Source – The Economic Times, 24-December-2015)

India, the world's third largest producer of coal, imported 212.103 million tonnes (MT) of dry fuel worth over Rs. one lakh crores in the last fiscal, the highest ever in terms of value and quantity.

The coal imports in the financial year 2014-15 were at 212.103 MT, an increase of 27 percent over the previous year, the provisional coal statistics of 2014-15 released by the Coal Ministry said.

Of the 212.103 MT of coal (worth Rs. 104,524.1 crores), the non-coking coal import was 168.388 MT, while coking coal import was 43.715 MT, it said.

The coal import during 2013-14 was at 166.857 MT (Rs. 92,329.2 crores) while in 2012-13 it was 145.785 MT (Rs. 86,845.5 crores).

In 2011-12, the country imported 102.853 MT (Rs. 78,837.6 crores) of coal while in 2010-11, the import stood at 68.918 MT (Rs. 41,549.6 crores).

In 2009-10, 73.255 MT of coal (Rs. 39,180.0 crores) was imported and in the previous fiscal 59.003 MT (Rs. 41,340.8 crores) of coal was imported.

Coal Secretary Mr. Anil Swarup said that coal imports dropped by 27.16 percent to 12.6 MT in September from a year-ago period on the back of rise in domestic production.

Coal India accounts for over 80 percent of the domes

tic coal production and is targeting one billion tonnes of coal production by 2019-20 fiscal.

The government had earlier said it was expecting that one billion tonnes output target will enable it to stop imports of thermal coal in two and a half years, which will soften pressures on current account deficit.

(Source – Assorted with the Inputs from PTI)

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Coal imports declined by 11 percent to 19.30 million tonnes (MT) in July 2015 compared to the same month of previous year as higher availability of do-mestic fuel led power generation firms to defer im-ports.

"The coal import in July 2014 stood at 21.68 MT (million tonnes). July 2015 import was down by 10.98 per cent compared to July 2014," Mr. Viresh Oberoi, the CEO and MD of mjunction services, said in an e-mail reply.

mjunction services, an e-auction joint venture be-tween Tata Steel and SAIL, is major online market-place for steel and coal.

"There were several reasons for fall in imports. First, higher availability of domestic coal prompted power generation companies to defer their imports. Second, there was a tendency among Indian buyers to defer their purchases on account of monsoon that affects handling at some of the Western Coast ports," he said.

Also, some buyers appear to have adopted a wait and watch policy, anticipating further softness in in-ternational coal prices, he added.

He further said that overall coal imports by power plants may fall due to increased domestic coal avail-ability, which is visible from the fact that about 30 MT of coal stock is lying with various power plants as on July 29, 2015, compared with a low stock of around 10 MT as on July 31, 2014.

In fact, the coal stock with power plants is hovering around 30 MT level since the beginning of June, 2015, due to higher supplies by Coal India (CIL), he said.

CIL accounts for over 80 percent of the domestic coal production.

In addition, he said the demand for electricity from distribution companies is not growing in the way it was projected to grow. The poor financials of dis-coms that reduced their purchasing capacity is also one of the reasons for lower than expected electricity generation.

In fact, the country's power generation in June was down 6.27 percent to 88.992 billion units (BU) com-pared with 94.944 BU in May and was almost flat compared with 88.853 BU generated in June 2014, Mr. Oberoi said.

Commenting on the outlook, he said, "We believe coal imports, all categories, will remain same as the previous financial year and we are looking at around 240 million tonnes for 2015-16."
(Source – Assorted with the Inputs from PTI)

The underlying import drivers for India are of such strength that India will become the largest seaborne thermal coal market in the world in 2015.

This is according to commodities pricing expert and forecast company CRU Group’s managing consult-ant Mr. Alex Tonks who says that electricity short-ages in India are one of the biggest constraints on the country, and electrification is a key objective of the Mr. Modi government.

The aggressive targets that the government has set in this area mean that Indian electricity generation is expected to grow at one of the strongest rates of any country in the world - indeed, analysis in CRU's lat-est Thermal Coal Market Outlook shows a staggering growth rate for electricity production of 46.8 percent between 2014 and 2019.

Demand growth potential in India remains huge due to a combination of a growing population, wealth and electricity share within primary energy, as well as unmet demand. The majority of this growth will come from coal-fired plants, which will contribute around 80 percent of all new generation, despite de-lays in the construction of the Ultra Mega Power Plant projects.

Coal will remain India's most dominant fuel source, with imports required to meet demand
CRU assesses that coal will continue to play a domi-nant role in India's energy mix, despite the nuclear, hydro and renewable pushes taking place. This is be-cause of coal's ability to keep up with the surging de-mand needs of the country which has seen it gain market share to date, and will see it hold on to that share moving forwards.

On the domestic front, a number of years of less-than-spectacular production growth has failed to keep up with power consumption growth, and, in turn, this has caused a significant increase in and reliance on imported thermal coal.

While Mr. Modi’s government has stepped up plans to increase domestic coal production and power gen-eration - the reallocation of domestic coal blocks, in-teraction with labor unions and the approval of for-est clearances are all signs the government is willing to push ahead with domestic output growth.

CRU maintains the view that, unless there are seismic changes in Indian policy and red and green tape, we are not as optimistic as the government's domestic coal production targets. In conjunction with research conducted by CRU's Mumbai office, we estimate In-dian domestic coal output to be 599 Mt in 2015, with a CAGR of 4.8 percent between 2013 and 2019.

(Source – Mining Review.com, 17-June-2015)

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