The federal coal ministry has set an overall coal production target of 100mn t from underground mines by 2030, according to a government statement. India produced close to 35mn t in the April 2022-March 2023 fiscal year, with output from state-controlled Coal India (CIL) accounting for the bulk of the production. It is unclear if the target for output from underground mines is for the calendar or fiscal year.
The plans are part of India’s larger goal to raise total coal output to 1.577bn t by 2030 from opencast and underground coal mines. Production from opencast mines accounts for more than 95pc of India’s coal output. The focus on underground mining comes ahead of the UN Cop 28 climate summit in Dubai — due to begin on 30 November — as underground mining is considered more environmentally friendly compared with opencast mining.
Delhi’s plan to boost output from underground mines is not new, but such projects have largely not taken off over the last few decades because of a higher cost of production from such mines compared with opencast mines. The cost difference assumes importance as CIL’s coal prices are at a steep discount to international prices because of broad government controls on its notified prices. Some industry and government officials think that scale of production, deployment of new technologies and investments in the coming years will bridge the gap between cost of production from opencast and underground mines.
Higher coal production would help boost domestic supplies to cater to an increase in demand from utilities and to power the country’s economic growth. India plans to add about 80GW of thermal power generation capacity by 2031-32, as part of plans to provide round-the-clock electricity. India has 27GW of thermal power capacity under construction and has now decided to start work on at least 55-60GW of additional capacity. India had 206.82GW of installed coal-fired capacity as of 31 October, while total thermal capacity including lignite, gas and diesel was 239GW.
Rising supplies
India’s domestic coal output and supplies have continued to increase recently to cater to an uptick in coal-fired power generation, which meets the bulk of India’s electricity requirements.
Coal-fired generation rose to 111.13TWh in October from 83.59TWh a year earlier, according to data from the Central Electricity Authority. October’s coal-fired generation was also higher than September’s 103.34TWh.
The rise in power demand has also supported India’s coal imports, with receipts of seaborne thermal coal rising by 7.9mn t or 65pc from a year earlier to 20.11mn t in October, according to shipbroker Interocean data. January-October imports totalled 138.96mn t, up by about 1.5pc from 136.91mn t a year earlier. India imported 158.29mn t of thermal coal in the whole of 2022.
Policymakers think that a steady increase in domestic coal production will help reduce India’s thermal coal imports. The government is working towards its production enhancement plan to ensure adequate availability of domestic coal for utilities. The plan includes opening new coal mines, expanding existing mines, producing more from captive and commercial coal mines, and boosting India’s overall railway network to transport domestic coal.
