State-run Coal India Limited (CIL) is focusing on acquiring coking coal assets in Australia.
The board told shareholders last week that Australia was the “prime destination” for investment in coking coal assets, while South Africa and Mozambique would also be considered
CIL said in an expression of interest (EoI) floated recently that it intended, “to set up cooking coal and/or high grade low ash thermal coal mining business overseas with a view to acquire coal resources, produce coal and import the produces to India by way of either opening new mines or equity participation in working mines on production sharing participation Interest [PI] basis.”
The company is looking to acquire mines abroad in order to gain access to high caloric value coal supplies, demand for which is increasing in India.
Although CIL increased non-coking coal production by 3% to 499.48 million tonnes in the fiscal year to March 2017, coking coal production went up by only 1.5% at 54.65 million tonnes.
Coking coal comprised around 10% of the company’s annual production of 554.14 million tonnes during the year.
Existing and potential high caloric value coal reserves in India are limited. “It may not be possible to bridge the entire demand gap of coking coal and high-grade low ash thermal coal, primarily because of limited availability of techno-commercially recoverable coking coal reserves and near absence of high-grade low ash thermal coal reserve in the country,” said CIL in another report.
Demand for high caloric value coal in India continues to rise, which is currently estimated at around 100 million tonnes per year.
The supply shortage is filled through imports from Australia, Indonesia and South Africa. Trade data showed that the country’s high caloric value coal imports reached 39 million tonnes in the year to March 2017
The federal coal ministry estimates that demand for coking coal is expected to reach 150 million per year tonnes by 2020.