LAUNCESTON, Australia – India, poised to become the world’s largest importer of thermal coal, appears to be opening up its domestic mining sector to foreign competition just as Indonesia, its biggest supplier, is making it harder for exporters.
On a superficial level it appears that India and Indonesia are choosing different paths for their coal sectors, but the policies being pursued by the countries’ new, reform-minded leaders may have more in common than first appearances suggest.
India may allow foreign companies to mine coal, as long as they set up units in the country, Reuters reported on Oct. 22, citing a source familiar with the matter.
This would be a major change for the South Asian nation, which has the world’s fifth-largest coal reserves but suffers from ongoing shortages because of inefficiencies across the mining, transportation and distribution chains.
Coal mining has been dominated by state-controlled Coal India, which consistently fails to meet targets for production and supply. What private mining existed in India was thrown into chaos recently by court rulings that found the allocation of coal blocks by the previous government had been illegal, and that these areas would be returned to the state and Coal India.
Prime Minister Narendra Modi now appears to aim to open up the coal mining sector to both foreign and domestic competition, a necessary step if he is to end electricity shortages that threaten to thwart plans to return the economy of the world’s second-most populous nation to rapid growth.
The scale of Modi’s challenge can be seen by the 37 coal-fired plants that recently had less than four days of stocks left, a situation that results in power cuts, which in turn force businesses and wealthier households to maintain costly diesel-powered generators.
MINING REFORM NOT ENOUGH
Allowing more companies in the mining space may go some way to boosting output and closing the gap between domestic production and demand, which the government estimated at between 185 million to 265 million tonnes by the 2016-17 fiscal year.
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