Current coal shortages temporary, says mining equipment maker head

The present coal shortages are going to be short term with the supply position beginning to ease by July, the head of a heavy engineering manufacturer has said.

“It’s a very temporary thing. The coal shortage situation has arisen from the fact that economic growth has gained good traction after passing through a difficult phase for a couple of years due largely to the Covid-19 pandemic,” chairman, Gainwell Engineering, Sunil Chaturvedi told Business Today on Wednesday.

“The summer season is in any case a difficult for India as this is when the energy requirement peaks. Hopefully, in two months we should see a solution. This is a temporary thing and is not going to be a long-term problem,” he further asserted.

Chaturvedi, a former Bharat Forge executive director who has also served as a bureaucrat, said that the country must continue to dedicatedly work towards ramping up domestic coal production to stabilise its energy security.

“Any time that Indian starts to grow at 7-8 per cent, energy requirement also goes up by 10-12 per cent. Two years of muted demand for energy followed by a very robust upsurge has caused this shortage. However, one cannot ignore the fact that India is still dependent 15-20 per cent on imported coal,” observed Chaturvedi.

In FY2021-22, Asia’s third-largest economy had imported 173.32 million tonnes of coal from Indonesia, Australia, South Africa and the US. As the world’s second-largest coal producer, the country also holds the fourth-largest reserves of the commodity.

In June 2020 the country put 41 mines on the block to reduce import dependency by encouraging commercial mining of coal. The import of all grades of non-coking coal especially has witnessed a significant decline since, according to government data. In FY2022-23, the government expects to cut coal imports by around 35-40 million tonnes.

Speaking on the impact of the Russian military action in Ukraine, Chaturvedi said, “What I hear from the market is that some of the steel grade coal is not available as several of our large players were dependent on Russian imports and it may take them some time to find another source. However, our private sector players are now actively scouting for alternative suppliers.”

The country’s coal demand is projected in the range of 1.3-1.5 billion tonnes by 2030, an increase of 63 per cent from current demand, according to the Economic Survey 2021-22.

Tie-up with World Coal Association

Earlier in the day, the Kolkata-based firm announced a partnership with the London headquartered World Coal Association (WCA) to promote sustainable coal mining in India. Gainwell Engineering is setting up a mining equipment manufacturing facility at Panagarh in West Bengal on 25 acres, which will be commissioned in early 2023.

“Coal is still the world’s largest source of energy. Recent and current events reconfirm that coal is still needed and not in decline. Coal is not disappearing, it is simply transitioning to a more sustainable model,” emphasised CEO WCA, Michelle Manook.

In February, Gainwell Engineering, the manufacturing venture of Gainwell Commosales (formerly Tractors India), had entered into a licensing agreement with the US heavy engineering firm Caterpillar for underground mining equipment.