Coal imports into the country are unlikely to rise, thanks to a surge in domestic coal production, but the demand for coal from new thermal power plants is likely to taper off after five years and leave some coal mining assets stranded, according to a report released on Thursday by S&P Global Platts.
“A rapid expansion in domestic production has seen Indian thermal coal imports peak. Targets for boosting output remain ambitious, but are likely to be sufficiently successful to further reduce the country’s dependence on imported coal,” the report on the impact of the government’s ‘Make in India’ program on commodities and energy sectors noted.
“India is no longer the dynamic coal import market of yesteryear. Domestic production will continue to expand, but India’s energy trajectory is becoming less coal-based, raising a real risk of stranded assets,” said S&P Global Platts, a division of S&P Global, adding that some assets will be stranded with no takers for their coal output in the 10-15 year time frame.
Overall, new projects announced under the Make in India program are helping to drive up demand for resources such as oil, coal, petrochemicals and metals. In the case of steel, however, though demand will grow faster, imports could also surge.
“A key imbalance in the Indian steel sector is a lack of high value-added production capacity. This imbalance is expected to widen as a result of the government’s “Make in India” campaign, and the expansion of India’s passenger vehicle market. The latter is expected to reach 9.4 million units per year by 2026, up from 3.41 million passenger vehicles during 2015-16,” the report pointed out.
