India Predicted to Fill the Gap Left by Slowdown in Chinese Coal Demand

Researched by Industrial Info Resources Australia (Perth, Australia)--China's dramatic slowdown of coal imports could hurt Australia's miners. However, it is expected that India will continue to seek a stable supply from Australia to help its underperforming power plants meet rising demand for electricity.

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China's imports of coal grew just 0.9% in the first half of this year, compared with 13.3% only last year, and traditional stockpiles that were estimated to be hovering around the 200 million-metric-ton mark last year have risen to more than 300 million metric tons. China's own producers have been going out of business, while major Chinese companies have been reporting losses, as a result of the global coal supply accessible on the market.

China produces and consumes nearly as much coal as the rest of the world combined, yet its appetite is slowly being affected by the government's plan to switch to a clean coal diet in an effort to cut smog and promote cleaner energy sources, such as gas and renewables. Air pollution is a major problem for the country, with a recent report estimating that more than 1.2 million people there died in 2010 as a result of poor air quality.

While China aims to decrease its reliance on the fossil fuel, India is expected to fill the demand void. There is a considerable gap between the amount of coal India produces and its demand for the commodity, and Australia seems to be in a prime position to take advantage of this opening.

India is expected to undergo a rapid development scheme now that newly elected Prime Minister Narendra Modi is in power. However, growing demand for electricity in India has left local coal producers unable to fully supply the country's power plants, with many of them struggling to keep up with the daily demand for electricity. The country will seek to import coal from a number of multi-billion-dollar mines scheduled for development in Australia's Galilee Basin--particularly the massive AU$4.1 billion (US$3.9 billion) Carmichael Carmichael project in Queensland, where developers aim to export 60 million metric tons of coal from the Abbot Point Coal Terminal.

India sees Australia as a dependable source of high-quality coal, and will aim to import more coal and pool it with domestic supply to help power plants throughout the country run at optimal levels. In fearing an expected decline in Chinese demand for coal, Australia can begin to look forward to supplying a new partner in India.

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