Indian coal imports slump again, confirming Carmichael has no future | RenewEconomy

Indian coal imports slump again, confirming Carmichael has no future

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India remains firmly on track to meet its publicly stated goals of ceasing thermal imports by 2017/18.

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India last night announced a 15% year-on-year decline in coal imports for the twelve months to March 2016, as the country remains firmly on track to meet its publicly stated goals of ceasing thermal imports by 2017/18.

The latest data confirms that India is firmly on track to meet its goal of ending expensive coal imports. Even a cursory look at the evolving energy policy in India makes it clear that Adani’s Carmichael mine project in the Galilee Basin has no future.

The Adani proposal is a low energy, high ash thermal coal deposit that would deliver coal into India at double the cost Coal India Ltd is supplying domestic coal and even at current depressed coal prices, it is more expensive alternative than domestic solar.

It’s hardly surprising then that on the same day Queensland Mining Minister Anthony Lynham awarded the Carmichael project a Mining Lease, Adani Enterprises Pty Ltd announced they were deferring the project another year.

In the context of a country that has historically been handicapped by massive coal shortages and hence endemic, near daily electricity brownouts, the record high 84 million tonnes (Mt) of coal stockpiles across India reported in March 2016[i] combines with record high domestic coal production from Coal India Ltd in 2015/16.

This means that the Indian economy now has the electricity supply capacity and fuel supplies in place to allow Prime Minister Narendra Modi to deliver on his target for 7-8% annual economic growth.

The 16% yoy increase in electricity demand announced for March 2016 is in itself a record high rate of growth, following on from 9.2% yoy growth in February 2016.[iii]

This strongly supports the Indian Finance Minister Arun Jaitley’s assertion that India is delivering a much needed step change upwards in economic activity, particularly at a time of the Chinese economic slowdown.

In addition, this 15% yoy decline in Indian coal imports is being trumpeted as a serious economic achievement in another context. Coal Secretary Anil Swarup is highlighting the massive US$4.2 billion annual savings to the Indian current account deficit.

When PM Modi was elected in May 2014, India’s currency was depreciating out of control due to a current account deficit approaching 5% of GDP. With the collapse in oil and coal prices and now the collapse in coal import volumes, the current account deficit has been reduced by two-thirds in less than two years, stabilising the Rupee’s foreign value.

Indian fossil fuel subsidies have been radically curtailed in 2014/15, and India’s tax on coal doubled to US$4/t effective April 2016. This is an almost unique move to levelise the energy sector playing field.

In this context, with unsubsidised, utility scale solar electricity now available at as low as Rs4.34/kWh (US$64/MWh) fixed flat for twenty five years, imported coal is structurally challenged.

Indian solar generation costs have fallen 25% in just one year. IEEFA forecasts that continued technology and economies of scale gains will continue at 5-10% annually, further eroding imported coal’s competitiveness.

As a confirmation of this trend, the largest power firm in India is NTPC Ltd with 46GW of mainly thermal power generation capacity. At the start of 2015/16, NTPC forecast it would import 21Mt of thermal coal.

Last week, NTPC reported its coal imports in 2015/16 were down 42% yoy to just 9.5Mt.[iv] Further, NTPC has forecast it will not import any coal in 2016/17.[v]

Even further, Goyal has directed NTPC to pursue a rapid upstream vertical integration strategy that will see in-house domestic coal mining capacity ramp up to 300Mtpa by 2020, in addition to Coal India Ltd’s doubling to 1,000Mtpa of coal capacity.[vi]

The rate of Indian coal import decline is accelerating every month. Following five years of 20-30% annual growth, this marks an historic turning point in energy market transformation.


 

 

[i] http://www.miningweekly.com/article/coal-of-indias-stockpile-expands-further-forcing-cutbacks-2016-03-07
[ii]https://www.coalindia.in/DesktopModules/DocumentList/documents/Provisional_Production_and_Offtake_of_CIL_and_Subsidiary_Companies_for_the_month_of_Mar%e2%80%9916_and_for_Apr%e2%80%9915_-_Mar%e2%80%9916__02042016.PDF
[iii]http://www.cea.nic.in/reports/monthly/executivesummary/2016/exe_summary-02.pdf
[iv]http://www.ntpc.co.in/en/media/press-releases/details/record-generation-ntpc-stations-fy-16
[v]http://economictimes.indiatimes.com/articleshow/51699788.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
[vi] http://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/india-to-rely-on-state-miners-to-meet-coal-target-piyush-goel/articleshow/51585049.cms
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10 Comments
  1. Mike Dill 4 years ago

    Carmichael will never happen. With some luck Hazelwood will become non competitive and close soon also.

  2. john 4 years ago

    As everyone has know for at least over a year the landed cost of imported coal is too high.
    Trying to put any other slant on the non start for Carmichael is being untruthful.
    The WTO decision on the Indian requirement for a % of solar installations to be manufactured in India is not helping them deploy solar.

  3. Reality Bites 4 years ago

    Not much to cheer about here, the anti coal lobby thinks that by India digging up its own poor quality low calorific value, high sulphur and ash coal is better than the superior coal that Adani say they are trying to produce from Carmichael. India increased its domestic production by 42 million tonnes in one year and has a policy to increase overall production by 500 million tonnes per annum by 2020. Adani believes they can burn 30% less coal in their Super Critical power stations using Carmichael coal. Maybe Tim and the ACF team should actually sit down with Adani and see what they are trying to do rather than just blindly object.

    • Peter Castaldo 4 years ago

      Can I ask you reality are all the new or expanded coal mines worse than the adani mine for you to make that statement? Do your calculations incorporate all the energy and resources to get it to India as well. What price did you put on the environmental damage in australia?

      • Reality Bites 4 years ago

        Can you prove that your information is any better than mine? Yet Adani have invested billions of dollars as testament to their conviction to proceed with the project. On the other side, I believe, anti-coal activists like Tim Buckley are paid thousands of dollars to criticise the project. Does your calculation factor in that Indian coal is on the East Coast of India and has to be shipped to the West coast where Adani have the bulk of their coal fired super critical power stations. Or that the Tenders for new coal tenements in India achieved prices of up to USD50 pmt for coal still in the ground? So if there are no environmental controls for the mine in Australia, what are all the court challenges about? You are just repeating the mantra of the anti coal mob with no real appreciation of the facts.

  4. Alen T 4 years ago

    The NTPC was further recently forced to shut down for 10 days due to unprecedented water shortages. Arguments against Carmichael are only strengthening, and although I do not agree with Qld’s decision to grant the mining licence, I believe Labor knew very well that no matter if they approved or disapproved it is in reality a doomed project, i.e. it was a political and strategical move to placate the coal lobby and LNP while knowing it actually won’t proceed further

  5. john 4 years ago

    If India has a policy to not import coal to reduce the bottom line for the country I wonder which exporter is going to try a WTO challenge?
    Just how to deliver coal at below $50 a tonne when it is above $70 a tonne I would like explained?
    No amount of spreading disinformation changes the basic facts.
    RE is cheaper and affordable, against imported coal, let alone those who have no power are the people who are the poorest of the poor.
    It would appear that the days of just wishing something to happen when it is not viable are over in this context.

  6. Miles Harding 4 years ago

    Perhaps soembody should tell the Qld government that they aren’t starring in Field Of Dreams and if they build it, nobody will come, so don’t even think about expanding Abbot point.

    Another way to look as this is that the know fully well that the carmichael mine is a total loser and no amount of approvals will breathe life into that dead corpse, so they chose to annoy those environmental lefties that would never vote for them in any case, while appearing to be pro-coal for the loony right, who also would never vote for them in any case.

  7. Phil 4 years ago

    China coal imports are also in decline yet this expert states clearly there is no structural decline on coal. Just market forces at work apparently.

    http://www.cqnews.com.au/news/expert-tells-court-coal-market-not-change/2991123/

    I can see however a very large shift away from hard to get to coal to much easier open cut mines. If the product is cheap then it has to be cheap to extract.

  8. phred01 3 years ago

    Adani is looking to put it’s snout into Australian govn’t coffers for free cash handout

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