Attention international coal industry. There's a new kid on the block. The nation of India. India is emerging as a major re-shaping force for the global coal market. With in-country coal supplies flagging, Indian buyers are increasingly turning to imports to meet demand. The situation at many of the nation's power plants is dire. The federal Central Electricity Authority monitors coal stockpiles at 79 plants throughout India. As of yesterday, 19 of those plants (25%) were running at "critical" levels, with less than 7 days worth of coal on hand. In fact, 9 of those plants are operating with less than 4 days of coal supply. Meaning that 11% of national generating capacity is teetering on the edge of shutdown. These plants are completely reliant on new coal deliveries. If coal shipping is disrupted for any reason, there's no back-up.
There are a few factors at play here. Firstly, India's coal production is lagging demand. Due to fixed government pricing that makes it difficult for coal miners to turn a profit. There's simply not much economic incentive to build new mines (although the government is trying to horse-whip producers into increasing output, even at low prices.) The other problem is that India's coal-producing regions are distant from many of the electricity demand centers, especially along the coast. Bottlenecks in rail transport make it difficult to get coal to many of the power plants that need supply most. A clear solution seems to be emerging amongst many of India's biggest coal buyers. Go international. Yesterday, Maharashtra State Power Generation Co. (the firm that supplies power to Mumbai, among other places) announced it will seek to import 3.35 million tons of thermal coal in the year beginning April 1. This is a big jump in Maharashtra's foreign coal use. Up 40% from the 2.4 million tons imported in the year ended March 31. The company's managing director Subrat Ratho made it clear this is a decision coming from the highest levels in India. As he noted, "We would like to import as little as we can because overseas coal is six-times more expensive than Indian coal. But it appears the Ministry of Power has made an assessment of how much coal the domestic companies will be able to supply to various states and have given us…
