Coal surge is unabated, raising environmental concerns, writes Asia Sentinel’s Siddharth Srivastava

India’s quest for overseas coal continues, driven by the country’s burgeoning economy and energy needs. South Africa shipped an estimated 35 percent of its thermal coal exports – 2.1 million metric tons – to India in July, almost twice June’s 1.2 million tons.

India has averaged buying 34 percent of South African exports throughout 2010, making up for weak European buying in the wake of the continuing economic downturn. Earlier this year, Raymond Chirwa, CEO of Richards Bay Coal Terminal, said there has been a marked shift in coal buying by Indian power firms.

As an indication of India’s thirst for coal, “Of the total exports (of 60 million tons from South Africa) in 2009, 41 percent was shipped to the Asian markets, and out of this 29 percent was for the Indian market,” Chiwa said. “18 percent was exported to the Asian market during 2008, of which India accounted for 11 percent.”

India’s growth, beginning in the 1990s when the economy came unshackled from the license raj, has averaged 7 percent per year, slowing only slightly to 6.5 percent in 2008 in the coils of the global economic downturn. Industry now makes up 28.2 percent of gross domestic product, making it the second-biggest component of GDP and increasing the demand for fossil fuels.

Although India has the world’s fourth-largest thermal coal reserves, they are being depleted at a rapid pace at the same time the industry has been hobbled by bureaucracy that has stalled the award of contracts to the mining industry. This month, India’s Parliament finally amended the Mines and Minerals Development and Regulation Act of 1957, which should speed the auction of coal blocks. The competitive bidding system would substitute the existing process of allocating coal blocks via an inter-ministerial screening committee and bring more transparency and investment.

It is sorely needed despite substantial environmental concerns. While coal consumption has soared in the construction sector – particularly steel and cement production – it is power that takes most of it. Some 70 percent of the country’s electricity is being generated by coal despite new and intensive moves into renewable energy sources, which are too little and too late.

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