India’s Coal Ministry is proposing to establish a coal trading exchange as domestic coal production jumps with the government push for higher output and sector reforms allowing private firms to operate mines.
“With the increased availability of domestic coal in the country, it is envisaged that there would be a paradigm shift towards a surplus coal scenario,” the Coal Ministry said in a notice launching a public consultation on the creation of a coal trade exchange.
The surge in domestic coal supply would change the existing mechanisms of coal sales channels, necessitating a major market reform to promote competitive markets for the sale of coal, the ministry added.
Currently, the government-owned companies Coal India Limited (CIL) and Singareni Colleries Company Limited (SCCL) sell coal. So the country – the world’s second-largest coal consumer after China – needs a platform such as a Coal Trading Exchange (CTE), to allow commercial miners to sell their coal on the market, the ministry says.
The exchange is envisaged to lead to a ‘many-to-many’ platform where both buyers and sellers can bid simultaneously, thereby, making price discovery of coal more efficient and competitive, according to the government.
India reduced its imports of coal in 2024 as it began to boost its domestic supply of coal.
India has been looking to cut its dependence on foreign coal supply to meet its surging power demand and has hiked domestic production. While coal is abundant in domestic mines, it is typically of lower quality and contains lower levels of energy when burnt compared to most imports.
India’s coal production is expected to reach new heights in the coming years, the coal ministry said. The country is set to produce 1 billion tons of coal in the 2024-2025 financial year ending March 31, 2025. Annual coal output is likely to exceed 1.5 billion tons by 2030, according to government estimates.
By Tsvetana Paraskova for Oilprice.com
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