India has the world's fifth-largest coal reserves and coal remains the country's primary source of energy. Coal's importance to the economy is underlined by the fact that the state retains a near-monopoly on the coal sector, as the country's power sector makes up the majority of coal consumption. India has 211 gigawatts of installed electrical capacity, primarily in coal-powered plants but because of insufficient fuel supplies, India suffers from a growing shortage of electricity generation, leading to rolling blackouts.
The properties CIL is investigating mainly hold thermal coal but some also have coking coal reserves. A CIL Board subcommittee on foreign acquisition has already voted favorably on the proposals, The Hindu newspaper reported Thursday.
Like China, India's domestic energy policy's primary objective is to secure energy sources to meet the needs of its growing economy, as its energy consumption more than doubled between 1990 and 2011. The government, however, may not be able to deliver secure energy supplies to consistently meet demand because of fuel subsidies, increasing import dependency, and inconsistent reform of the country's bureaucratic ridden energy sector.
A CIL official speaking on condition of anonymity said the most promising sites were in Australia, as the deposits there under consideration have a potential production of about 30 million tons per annum with scope for expansion, and that CIL officials have already been given access to the data room of the Australian mines. The properties are privately owned mines in East Australia, with one valued at $2.25 billion, and CIL is pursuing the possibility of establishing an equal joint venture.
Besides Australia, CIL is also investigating possibilities in Indonesia and Colombia and is preparing to increase its funds available for developing the coal bloc it acquired in Mozambique in 2009.
The issue of coal shortages is increasing for India, as the estimated shortage between supply and demand for 2013 of coal, including coking coal, is now projected at 265.5 million tons. In 2012, India imported 137 million tons of coal, the majority of which came from Indonesia, followed by Australia and South Africa.
A 2012 International Energy Agency report estimated that nearly 25 percent of India's population still access to electricity, while electrified areas suffer from rolling electricity blackouts, both issues which New Delhi is anxious to resolve. Last year, Indian coal producers
failed to reach the government's latest production, while demand has grown by more than 7 percent per year over the last decade. Because of the shortfall, India's coal imports have grown by more than 13 percent per year since 2001.
India's power sector is the country's largest consumer of coal, accounting for roughly 73 percent of the nation's coal consumption. Because Indian thermal power plants rely so heavily on coal, coal shortages are a major contributor to shortfalls in electricity generation and consequent blackouts throughout the country. India's steel and cement industries are also significant coal consumers, but the country has limited reserves of coking coal, an important raw material for steel production.