India’s Ambitious Coal Production Goals Amid Global Dynamics
India’s Ministry of Coal has announced a strategic expansion plan aimed at boosting domestic coal output by a staggering 42% over the next five years. The initiative targets an increase in production from 1,080 million metric tons in the fiscal year 2025-2026 to an impressive 1,533 million metric tons by 2030-2031.
Coal Production Milestones
In a significant achievement, India’s coal output surpassed the milestone of one billion metric tons for the first time during FY 2025, marking a 5% increase from previous levels. This production surge has contributed to an 8.4% reduction in coal imports, reinforcing national energy independence. Notably, coal accounts for over 74% of India’s electricity generation, reflecting a 3.5% increase in the same fiscal year, and is pivotal for industries including steel and cement.
Domestic Coking Coal and Steel Manufacturing
As the world’s second-largest steel producer, India continues to rely heavily on coal for steelmaking, with heightened domestic production of coking coal. The mining and construction equipment sector has also seen remarkable growth, with exports of concrete and road equipment skyrocketing by 133% and 122% respectively from FY24 to FY25. Earthmoving equipment, while still predominant, saw a modest growth of 5%.
Coking Coal Imports: Shifting Sources
Despite strides in domestic production, India remains dependent on imported coking coal, essential for steel manufacturing. Australia has been a significant supplier, providing over 53% of coking coal imports in FY25, down from 74% in FY20, with total shipments dropping to 30.3 million metric tons. The decline in reliance on Australian coal is attributed to rising costs and supply chain disruptions, prompting India to diversify its import sources.
Emerging suppliers, notably Russia and the United States, have collectively supplied about 30% of India’s coking coal imports. In a remarkable shift, Russian shipments nearly tripled to 8.7 million metric tons, while U.S. supplies more than doubled to 8.5 million metric tons. Other minor contributors include Canada and Mozambique, although Canada’s exports have halved to 1.7 million metric tons, while Mozambique’s exports have increased to 4.4 million metric tons, with total coking coal imports holding steady at 57 million metric tons.
Global Coal Consumption Trends
On a global scale, coal continues to power economies, especially in China, which consumes more coal than the rest of the world combined. China is actively expanding its coal fleet to fuel industries such as steelmaking and cement production while simultaneously using coal power for the manufacturing of critical components for renewable technology. This has positioned China, which boasts a booming electric vehicle market, at the forefront of coal utilization.
Contrasts with the United States
Conversely, the United States, despite holding the world’s largest coal reserves, experiences a decline in coal usage. Factors such as competition from low-cost natural gas, federal incentives for renewable energy, and stringent regulations have led to a significant decrease in coal’s share of U.S. electricity generation—from 50% to 16% in approximately 20 years. The last major coal plant in the U.S. commenced operations in 2013, and many existing plants have been retired.
However, recent developments indicate a potential resurgence for coal in the United States, driven by surging electricity demand from sectors like artificial intelligence and cryptocurrency. The Biden administration’s push for electrification, combined with calls from former President Trump for a national energy emergency, may lead to initiatives aimed at maintaining existing coal plants and exploring the expansion of coal generation to meet future energy needs.
Conclusion
India’s commitment to increasing its coal production underscores its goals for energy security and economic stability. As it seeks a 42% rise in output over the next five years, the country balances its substantial coal reserves and production with ongoing import needs. In contrast, while the U.S. navigates challenges in its coal sector, India and China leverage coal as a critical component for economic growth and energy reliability.
