India’s coal imports from Russia hit a yearly peak of $343 million in July, Sputnik analysis showed, based on data from India’s trade and industry ministry.
This surge in imports has enabled Russia to reclaim its position as the third-largest coal exporter to India, surpassing the US for the first time in a year.
Similarly, Bhattacharyya highlighted that Russia is an attractive option for energy products such as coal, oil, and gas due to its competitive pricing, and the ability to conduct transactions in Indian rupees.
This shift is notable as India previously sourced metallurgical coal mainly from Australia and thermal coal from South Africa and Indonesia, over time, imports expanded to include the U.S. and Canada, he argued.
The recent rise in Russian imports, according to Bhattacharyya, is driven by favourable trade terms and lower prices compared to countries like the U.S., and even with dollar transactions, Russian coal is expected to remain more affordable than imports from countries like Australia and the U.S., where high freight costs present challenges.
The former manging director highlighted that the another factor contributing to the increase in Russian imports is its ability to supply metallurgical coal, which is in short supply in India, whereas Indonesia, despite its high coal imports, it lacks metallurgical coal.
“Russian coal is preferred by some of the major import-based private power plants in India due to its quality and is mainly used for blending purposes as the end product becomes easy to use in their boilers,” Pritish Raj, Managing Editor, Asia & EMEA Thermal Coal at S&P Global Platts told Sputnik India.
A woman works at a coal depot in Ahmedabad, India, May 2, 2022.
© AP Photo / Ajit Solanki
Russian Coal Imports Fuel India’s Steel Sector Growth
In the same vein, the import of Russian metallurgical coal is crucial for India’s economic growth, particularly because the country lacks sufficient domestic supply, Bhattacharyya reckoned.
As India aims to double its steel production from 150-160 million tonnes to 300 million tonnes by 2030, the need for metallurgical coal becomes even more pressing, he added noting “this import is essential for supporting the ambitious steel production targets, thereby contributing to the country’s self-reliance in the steel sector.”
Meanwhile, Bhattacharyya predicted that India's imports of metallurgical coal from Russia are expected to rise, particularly if Russian coal continues to be competitive in both quality and price, aided by government negotiations.
While India’s thermal coal imports are expected to gradually decrease with the entry of new companies, the ongoing domestic shortage of metallurgical coal makes Russian imports crucial, he concluded.
At the same time, Russian Energy Ministry anticipates that Russia's annual coal production will increase to 600 million tonnes by 2050, up from 438 million tonnes last year, marking a roughly 37% rise.
By that time, Russia is expected to rank as the third or fourth largest coal mining country globally, reducing production costs by expanding open-pit mining operations.