India’s coal imports are bound to rise sharply over coming decades because domestic output can’t meet demand but the country should not rush into investing inforeign coal mines to assure supply, a senior official of MMTC, which imports coalfor Indian generators said on Monday.
At the Coaltrans India conference in Mumbai, MMTC director (marketing) H.S. Mann said: “We’re not in favour of investing in (coal) mines abroad at this time.It seems to be an investment bubble which will burst.”
State-owned Coal India Ltd and National Thermal Power Corp (NTPC) are both looking to invest in coal mines outside of India, to secure supplies of imported coal.
NTPC is looking at investing in coal mines in Indonesia but has no firm plans yet to buy into mining assets there, NTPC Director (Operations), Chandon Roy, told Reuterson Monday.
NTPC would probably prefer to invest in coal assets under the aegis of an inter-governmental cooperation agreement rather than buying into assets which are privately-owned, as most mines are in Indonesia, he said.
The projected gap between domestic supply and demand by the end of the current financial plan in 2008 will be 45 million tonnes, Mann said, all of which will have to be filled by imports.
Imported coal is more economic than domestic material for coastal generators, he said.
Domestic coal has a low sulphur content and high Ash Fusion Temperature but thelogistical cost of moving it to the plants makes it uneconomic. Indian domestic coalis about 35% ash which means that 35% of the rail transport cost is to move waste matter. Domestic coal is only economic for use in plants built at the site of coal mines, he said.
Coal will remain the predominant fuel for power generation in India for the forseeable future, he said.
Domestic coal is abundant, it is feasible to import increasing quantities of coal and other generation fuels are unlikely to be cost-competitive, he added.
Oil is likely to remain too expensive to become a significant generation fuel, nuclear and hydro generation have far higher initial costs than coal-fired plant and a longer gestation period, he said.
India is already committed to building mega and ultra-mega coal-fired power plants, he said, many of which will take only imported coal, as part of the government strategy to provide power to all and support the country’s economic growth.