India’s coal production is expected to grow from 777Mt in 2020 to 827.8Mt in 2021, representing a 6.4% increase, a new report from GlobalData shows. This follows growth of 3.1% in 2020, an impressive feat given the operational disruption caused by covid-19.
According to the UK-based analytics firm, key to this increase in output is the entry of private players to the industry.
“GlobalData expects coal production in India to grow at a compound annual growth rate (CAGR) of 9% to reach 1.2Bnt in 2025, meeting the Indian government’s target of 1Bnt. However, covid-19 will present some short-term challenges to this estimation,” says Vinneth Bajaj, mining analyst at GlobalData.
The sharp increase in new covid-19 cases since the beginning of March 2021 and fresh lockdowns across key coal-producing states (such as Odisha, Chhattisgarh, Madhya Pradesh, Maharashtra, and Telangana) have hampered India’s coal operations.
Despite this, Bajaj believes there was a slight recovery in coal offtake in April 2021, indicating a revival in demand over the coming months.
While power demand is growing in the country, coal is being gradually phased out of power generation over environmental concerns.
“In 2020, around 73% of the electricity in India was generated from coal. However, India has environmental commitments to reduce carbon emissions to 50% by 2030. As a result, the share of coal-fired electricity generation is forecast to fall to 70.6%, while the share of renewable rises from 2.9% in 2020 to 4.2% in 2025,” Bajaj adds.