Prime Minster Narendra Modi’s plans to shift India’s economy toward manufacturing and away from agriculture and services are being held up by a coal shortage.
Actually, there’s plenty of coal, just not enough trains to get it to the power plants. While about 200 railway convoys arrive every day at Coal India Ltd.’s depots, Technical Director Nagendra Kumar said the company needs 230 of them. The state-run company supplies more than 80 percent of the nation’s coal.
India will need to upgrade its railway network for Coal India to open more mines and deliver its product, said Deven Choksey, managing director at KR Choksey Shares & Securities Pvt., a Mumbai-based brokerage.
“The infrastructure bottlenecks are stopping Coal India from rising to its full potential,” Choksey said. Coal generates about 60 percent of India’s electricity.
With output climbing at Coal India, the fuel is piling up at the mines. At the same time, slumping global prices mean customers are turning to imports from the likes of Glencore Plc, BHP Billiton Ltd. and Indonesia’s PT Bumi Resources.
Benchmark thermal coal prices have slipped to near a six-year low, and prices are down by more than half since peaking in January 2011. That’s making imported coal more affordable.
India’s coal imports jumped 33.5 percent to 242.4 million metric tons in the year ended March 31, according to data from Mjunction Services Ltd., a Kolkata, India-based auction platform for commodities. The figure may reach 260 million tons this year, Mjunction Chief Executive Officer Viresh Oberoi said in an e-mailed response to questions.
BHP ended Sydney trading on Monday at A$33.35, up 2.6 percent, while Bumi Resources gained 4.2 percent to 75 rupiah in Jakarta.
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