Coal is turning out to be the oil of the new decade. Like the rush for oil a decade ago, companies are now scouting for coal resources globally.
The past few months have seen a number of Indian firms acquire coal mines outside India to ensure cheap energy supplies for their businesses.
A report brought out by Crisil suggests that moves are sensible, as coal prices are expected to shoot up in the coming years. This could also complicate matters for India, which is also set to emerge as a major importer of coal.
“China, which accounts for almost half the world’s coking coal consumption, will face an increasing shortage over the next two years,” says Crisil.
The shortage is partly because of the government’s move to shut down illegal coal mines. This has pushed China from a position of self sufficiency to importing 30 million tonnes of coking coal last year. Going ahead, demand is expected to grow much faster than domestic supply, notes Crisil.
Earlier this month, JSW Steel had finalised a deal to acquire a coking coal mine with 100 million tonnes of reserves in the US. Essar Group, which has a presence in steel, power and petroleum sectors, had also acquired a coal firm in the US earlier this year for $600 million.
JSW Energy, which is into power generation, acquired a stake in a South African coal mining firm for $65 million in April. Other major Indian firms, including Adani Power, Tata Power, GMR Infra and Reliance Power have also jumped on the coal bandwagon over the past few years. India’s top coal producer — Coal India Limited — has also joined the bandwagon by acquiring 85 per cent stake in the two mines in Mozambique in 2009. The company has also formed a JV with NTPC for overseas acquisitions.
Most of these are in Australia, Indonesia and South Africa. However, the recent acquisitions were also seen in the US.