Coal - Demand & Supply

Demand and Supply of Coal

in India

Industry Information Insights 2014

EnergySector.in

Table of Contents

Coal Reserves 3

Coal Production 6

Coal Imports 10

Coal Consumption 12

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Coal Reserves

After nationalisation of coal mines in 1973, detailed coal

exploration work on a large scale was initiated by Coal

India Limited (CIL) through its subsidiary, Central Mine

Planning & Design Institute (CMPDI).

Detailed exploration carried out by CMPDI and its

agencies have increased proved reserves from 21.3

billion tonnes in 1972 to 123.18 billion tonnes in 2013.

India has the fifth largest coal reserves in the world.

Although it has the fifth largest reserves of coal in the

world, it is not able to meet its domestic demand. Indian

coal is characterized by high ash content and low sulphur

content.

At the time of Independence, the known coal resources

of India were 37.11 billion tonnes down to a depth of 600

m.

At the time of nationalisation in 1973, the task force of

the Planning Commission estimated a total reserve of 81

billion tonnes (out of which 61 billion tonne was non-

coking), for seams of thickness 1.2 m and above and

down to a depth of 600 m.

As on Proved Indicated Inferred Total (BT)

1.4.2007 99.060 120.177 38.144 257.381

1.4.2008 101.829 124.216 38.490 264.535

1.4.2009 105.820 123.470 37.920 267.210

1.4.2010 109.798 130.654 36.358 276.810

1.4.2011 114.002 137.471 34.389 285.862

1.4.2012 118.145 142.169 33.183 293.497

1.4.2013 123.181 142.632 33.101 298.914

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Coal Reserves

Major coal bearing states in India include Jharkhand,

Odisha, Chhattisgarh, West Bengal, Madhya Pradesh

and Andhra Pradesh.

From 2007 to 2013, total coal reserves in India increased

at a CAGR of 2.52%. So far, a total of 298.914 billion

tonnes of geological resources of coal have been

estimated in India, up to the maximum depth of 1200

metre. Out of the total resources, the Gondwana

coalfields account for 297.421 BT (99.5%), while the

Tertiary coalfields of Himalayan region contribute 1.493

BT (0.5%) of coal resources.

257.381

264.535 267.210

276.810

285.862

293.497

298.914

230

240

250

260

270

280

290

300

310

1.4.2007 1.4.2008 1.4.2009 1.4.2010 1.4.2011 1.4.2012 1.4.2013

BT

Trends in Coal Reserves

CAGR = 2.52%

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Coal Reserves

Type-wise Coal Reserves

Of the total reserves, nearly 88% are non-coking coal

reserves, while tertiary coals reserves account for a

meager 0.5 % and the balance is coking coal.

India has very limited reserves of coking coal which is a

key raw material for the production of steel. Coking coal

accounts for only 15% of India’s overall proven coal

reserves. The Jharia coalfield, located in the state of

Jharkhand, holds the majority of the coking coal

reserves.

Out of total coal reserves, 41% are proved coal reserves,

48% are indicated coal reserves and remaining 11% are

inferred reserves.

41%

48%

11%

Proved Indicated Inferred

11%

88%

1%

Total Coking Non Coking Tertiary Coal

5

Coal Production

During the first 25 years of independence, growth in the

coal production was very slow. From a level of around 30

million tonnes (MT) at the time of independence, coal

production increased to only 73 MT in 1970-71.

India is the third largest coal producing country in the

world after China and USA.

History of Coal Production

India was producing 6.12 MTPA of coal by 1900 and 18

MTPA by 1920.

The production got a sudden boost from the First World

War but went through a slump in the early thirties. The

production reached a level of 29 MT by 1942 and 30 MT

by 1946.

At the beginning of the 1st Plan, annual production went

up to 33 MT.

1900

6.12 MT

1920

18 MT

1942

29 MT

1946

30 MT

1951

33 MT

1971

73 MT

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Coal Production: Year-wise

Currently, the government enjoys a monopoly in

producing coal with over 90% of the production coming

from government controlled mines.

The policy for captive mining, introduced in 1993, opened

the coal sector to private investment, however limited

progress has been made in the captive coal blocks

allotted by the government.

88% of coal is produced from opencast mines and 12%

from underground mines.

The production of coal increased from a level of about 70

million tonnes at the time of nationalization of coal mines

in early 1970's to 557.6 million tonnes in 2012-13.

The country’s coal production has increased from 457

MT in 2007-08 to 557.6 MT in 2012-13.

0 MT

100 MT

200 MT

300 MT

400 MT

500 MT

600 MTYear-wise Coal Production Trend

7

Coal Production: Plan-wise

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

0

100

200

300

400

500

600

1955-56 1960-61 1965-66 1973-74 1978-79 1984-85 1989-90 1996-97 2001-02 2006-07 2011-12

% MT

Terminal Year of FYP

Plan-wise Coal Production

Production (MT) CAGR (%)

8

Coal Production: Company-wise

Captive Blocks

Out of coal blocks allotted, only 38 blocks have started

production and another 10 coal blocks are nearing

production.

The combined production of coal from these blocks was

only 36.167 MT in 2012-13.

Coal India Limited (CIL)

CIL is the single largest coal producer in the world. It

produces around 81% of India's overall coal production,

thus enjoy a near monopoly in the sector.

Two of the subsidiary companies of CIL, South Eastern

Coalfields Limited and Mahanadi Coalfields Limited

produce more than 100 million tonnes of coal.

Singareni Collieries Company Limited (SCCL)

SCCL is the main source for supply of coal to the

southern region. The company produced 53.19 million

tonnes of coal during 2012-13, which is 10% of India’s

total coal production.

CIL Total 81%

SCCL 10%

Others 9%

9

Coal Import

2008-09 2009-10 2010-11 2011-12 2012-13

Coking Coal 21.08 24.69 19.48 31.80 32.56

Non-coking

Coal 37.92 48.56 49.43 71.05 105.00

Coke 1.88 2.35 1.49 2.36 3.07

Total Import 60.88 75.60 70.40 105.21 140.63

As per the present Import policy, coal can be freely

imported under Open General License by the consumers

themselves considering their needs based on their

commercial prudence.

Coking Coal is imported by Steel Authority of India

Limited (SAIL) and other Steel manufacturing units

mainly to bridge the gap between the requirement and

indigenous availability and to improve the quality.

Coat based power plants, cement plants, captive power

plants, sponge iron plants, industrial consumers and coal

traders import non-coking coal.

Coke is imported mainly by Pig-Iron manufacturers and

Iron & Steel sector consumers using mini-blast furnace.

Country-wise Coal Imports

In India, majority of coal is imported from Indonesia,

Australia and South Africa.

India is mainly dependent on Indonesia and South Africa

for import of thermal coal and on Australia for coking

coal. However, the new regulatory policies in these

countries are increasing coal prices. This necessitates

the requirement of intensive efforts in identifying new

avenues for supply like Mozambique and others.

Indonesia 56%

Australia 21%

South Africa 14%

Others 9%

10

Coal Import

Even some of the India’s large power producers have

shown a greater tendency to rely on imported coal to an

extent despite the fact that domestic coal blocks have

been allotted to most of their projects.

Presently, India ranks fourth in the coal import demand,

being led by Japan.

Import of coal in India started in 1980-81 when only 0.55

MT was imported.

India is not able to meet its coal demand and import of

coal from other countries has become inevitable.

Although India has the fifth largest reserves of coal in the

world, it is not able to meet its domestic demand.

Since FY2009 to FY2013, India’s coal import has grown

at a CAGR of 25.38%.

59.003 73.255 68.918

102.850

145.8

0

20

40

60

80

100

120

140

160

2008-09 2009-10 2010-11 2011-12 2012-13

MT

Gross Coal Imports

11

Coal Consumption in India

Power 71%

Iron & Steel 11%

Cement 4%

Others 14%

Sector-wise Coal Consumption

Power generation is the largest consumer of coal in

India, followed by iron & steel and cement.

12

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