Coal Exchange On Anvil: India Aims To Boost Output

New Delhi, Dec 27 (PTI) The coal sector is likely to witness a spate of activities in the upcoming year from launching maiden coal exchange to facilitating trading and rate determination of dry-fuel to meet the booming demand of the economy.

The government also intends to work more closely in the area of coal gasification as it is on a high priority list for energy transition.

Coal gasification is a cleaner option compared to burning of coal as it facilitates utilisation of the chemical properties of dry fuel.

Talking to PTI, Coal Additional Secretary Rupinder Brar said that "the demand (for coal) is extremely important. And we do see demand growing in India considering the growing size of the economy... Therefore, coal will also definitely be required and we are conscious of that and are working towards that".

The efforts will be to continuously augment coal output and align it with the demand, she said.

Brar said the pre-2014 policy on mine allocation has been disbanded and now the government gives blocks to allottees only when it is sure that it is going to be mined.

"If you do an early production, operationalisation of the mine, you get incentives, rebates. If you don't then there are penalties attached to it," the official said.

Elaborating on the priority areas of her ministry in the new year, Brar said the government is committed to a sustainable coal sector, balancing environmental sustainability with the wellbeing of coal-dependent communities.

She said the government is optimistic about coal exchange in 2025 and the details are being worked out.

The production rate both in state-owned Coal India Ltd (CIL) and its subsidiaries as well as the commercial and captive mines has been exhibiting excellent growth, she said, adding that the coal ministry hopes to build on a very positive growth story and take it further in the upcoming year.

According to the government's provisional figures, the cumulative coal production, which includes output of CIL and captive and commercial mines, in the April-November period of the current fiscal year registered a growth of 6.21 per cent to 628.03 million tonnes (MT) over 591.32 MT during the same period in 2023-24.

According to Deloitte India, the production of thermal coal in the country is expected to grow at a moderate 8-10 per cent, mainly due to rise in electricity consumption from retail as well as commercial sources. This growth is expected to be driven by captive mines, which are expected to boost production to 175 million tonnes.

"India's thermal coal imports are expected to remain stable around 200-210 million tonnes in 2025," Deloitte India Partner Rajib Maitra said.

India is likely to continue to drive the global demand for coking coal as it expands its blast furnace capacity and aims to reach 300 MT production by 2031. Imports of metallurgical coal to India is expected to increase in 2025 due to strong growth in production of crude steel.

"In FY24, Indian steel production was around 144 million tonnes. In FY25, steel production is expected to have a YoY growth of 6 per cent and reach 152-155 million tonnes. Therefore, the coking coal demand is also expected to grow 6-7 per cent," he said.

On the domestic supply side, the coal ministry had auctioned 10 coking coal blocks with a capacity of 22.5 million tonnes in 2023. Some of these blocks are expected to start production in 2025. Overall, the coking coal production in India is expected to increase from 67 MT in FY24 to 71-73 MT in FY25.

To promote coal and lignite gasification projects, the government launched a Coal Gasification Incentive Scheme with a budget of Rs 8,500 crore.

Synthesis gas produced from coal gasification can be used in producing synthetic natural gas (SNG), energy fuel (methanol and ethanol), ammonia for fertilisers, and petro-chemicals.

According to the coal ministry's action plan for 2024-25, the establishment of a coal trading exchange in the country would open up the market through an online trading platform, along with clearing and settlement mechanism, and provide easy availability of the dry fuel.

The draft note for the Cabinet for setting up of coal exchange has already been circulated for inter-ministerial consultations.