Coal to remain a dominant power source in India: Menar MD

Coal is poised to remain a dominant power fuel in India for nearly two decades despite popular belief that renewables will be fueling majority of power in Asia, and primarily India, as huge investment required to build green capacities and intermittent nature of renewables will likely remain a roadblock, according to Vuslat Bayoglu, managing director of South African mining company Menar.

“Rate of population growth in India commands higher-than-ever energy requirements, and to meet such heightened demand coal has to remain the mainstay for decades to come, even as renewables will see their fair share of growth. However, baseload power cannot be neglected, and coal will continue to drive that in India as the question revolves around not just energy needs but also reliability and uninterrupted supply, which unfortunately cannot come from renewables that easily in countries like India,” Bayoglu said.

According to Bayoglu, transition to renewables has a different meaning when put in an Asian context. “It is a requirement, of course, but it should not come at a cost of depriving people of basic energy needs,” he said, adding that Asian economies will be equipped to deal with it, but there should not be a timeline pressure, as affordability is a big concern in deploying renewable energy sources.

Meanwhile, investments that have gone into coal cannot be done away with without a proper realization of returns, he said, referring to coal-based plants across Asia that are newly built and are far from their lifecycle-end.

“There should also be talks around how to lower emissions from coal-based power and non-power sectors as they are the ones securing supply for many years to come, and how coal will always remain a baseload fuel even if renewables grow at an expected rate in Asia.”

India to drive energy sector spending
Menar, which has interests in coal, nickel, gold, and manganese, among others, looks at India as having an even higher say in overall energy commodities’ pricing structure as well as driving the demand fundamentals, particularly for coal in the international waters. Menar’s coal production capacity stands at about 7 million mt/year through subsidiaries and investments.

“A growing India is beneficial for the entire world, as demand centers will be the ones shaping a global trade narrative, especially when geopolitical risks have become a norm. Over the next few years, India will likely compete with China even more strongly as far as trade dominance is concerned,” Bayoglu said.

While India’s crude oil import bill fell in the last fiscal 2023-24 (April-March) due to lower international prices in the post-war stabilization year, import dependency hit a new high of over 87.7%, according to Petroleum Planning and Analysis Cell (PPAC) data, amid rise in population, rapid economic growth, and scaling up of infrastructure and industrial sectors. Coal imports also rose to a record over 260 million mt last fiscal, keeping overseas reliance to over 25% of the total consumption, and gradually narrowing the gap with Chinese coal imports that stood at over 450 million mt last year.

South Africa’s logistics snag on recovery path
While South African coal is preferred in markets like India, Pakistan, parts of Europe and China, domestic transportation trouble with state-owned freight operator Transnet, frequent rail line disruption, and issues of theft and burglary have collectively contributed to supply-chain inefficiency over the years, leading to underutilized export potential.

Bayoglu, however, believes the government along with other relevant stakeholders are working on plans to improve the logistics shortcomings, including increasing the number of trains, fixing line efficiency and bolster security.

“Logistics problems are a part of every country, and while I agree it has impacted South Africa more, I see improvement on the ground and in about 2-3 years, we’ll be able to get rid of many transportation and allied problems to be able to ship more products outside of the country,” he added.
Source: Platts