India’s coal sector
At the end of 2013, India’s coal sector was 60.6 billion tons. India has the fifth largest coal reserves in the world. However, India’s coal quality is low. It has a high ash content. The majority of India’s coal reserves are located in the eastern states. Southern India has the most lignite reserves in the country.
India produced 566 million tons of coal between April 2013 and March 2014. However, this didn’t meet the demand. The demand was 739 million tons. As a result, 169 million tons were imported. Most of the imported coal came from Indonesia, Australia, and South Africa. Thermal coal accounts for most of the coal produced in India. As a result, India has to rely on Australia for its met coal requirements. Met coal is used to make steel. To learn more, read Market Realists’ series Overview: Steel Dynamics.
India’s major coal producers
Coal India Ltd. (or CIL) accounts for ~80% of India’s total coal production. By volume, CIL is the biggest coal producer in the world. It’s followed by China’s Shenhua Energy Company and Peabody Energy (BTU). With a market cap of 38 billion, it’s one of the most valued coal producers in the world.
However, it isn’t featured in the VanEck Vectors Coal ETF (KOL). KOL invests in coal producers across the globe. It has holdings in Consol Energy (CNX), Joy Global (JOY), and Arch Coal (ACI). It’s listed on the Indian stock exchange, but the majority of CIL’s ownership lies with the Indian government.
CIL produced 462 million tons of coal in 2013–2014. The financial year runs from April to March of the following year. It expects to produce 502 million tons in 2014–2015. Apart from CIL, The Singareni Collieries Company Ltd. is another entity. It’s the only major coal producer in the country.
In the next part of the series, we’ll discuss coal production’s current state in India.