India and China’s coal mining revival holds an energy crisis lesson

[ad_1]



A crunch on coal production from key hubs in China and India is beginning to ease, but that won’t be enough to halt Asia’s energy crisis.


Major industries in the region, including steelmakers to chemical producers, are expected to continue to face power disruptions through the winter, as fuel supply remains tight and as governments prioritize heating demand from households.





Ltd., the world’s top miner of the commodity, has temporarily stopped deliveries to all consumers in the country other than power stations, even as it boosts deliveries from mines.


“Markets may barely get by this winter on supply,” said Natalie Biggs, head of thermal coal research for Wood Mackenzie Ltd. “If we experience colder than normal temperatures in the Northern Hemisphere, like we did last year, we could see some severe shortages in some areas.”


coal mining, coal, mining



China, the largest producer and consumer of the fuel, could boost mine output by an extra 100 million tons in the fourth quarter. Reserves are slowly rising in India after more than three weeks of daily declines, while Indonesia — the top exporter — is finally recovering from a rain-soaked slowdown in production.


The three nations are the world’s top coal producers, while China and India are by far the largest consumers, burning nearly two-thirds of the world’s supply combined. Even as mining activity ramps up, global coal production will remain below levels in 2019 and at a time when demand is increasing, according to Biggs.


Safety issues in China, heavy rains in Indonesia and Australia and logistics issues in Russia and South Africa have hampered all year. Combined with a post-pandemic recovery in industrial activity, that’s created a global shortage which is pushing prices to record levels and has caused blackouts and electricity curtailments.


Miners are finally starting to catch up. Indonesia, which had an unusually long and heavy rainy season, has now accelerated output and expects to meet an annual target of 625 million tons, according to Sunindyo Suryo Herdadi, director of mineral and coal program fostering, at the Energy and Mineral Resources Ministry.


chart



In China, monthly output is already about 18 million tons higher than last year and authorities are clearing bureaucratic hurdles to help producers add significantly more volumes, Sun Qingguo, senior safety supervisor with the National Mine Safety Administration, said at a briefing Wednesday. In total, that could add an extra 100 million tons of supply this quarter.


While that should help China heat homes and keep the economy running smoothly, energy-hungry industries will face power curtailments. Output from sectors like steel and cement could decline 30% through year’s end, according to UBS Group AG.


“Energy shortage remains a distinct risk over the winter in China and power rationing will be one of the policy measures to address the issue,” said Lara Dong, head of greater China power and renewables research at IHS Markit. Heating demand is expected to rise with temperatures forecast to drop from this weekend in regions including Inner Mongolia.


During a visit to a facility run by a home-appliance producer in Guangdong province Thursday, Premier Li Keqiang pledged to ensure power supplies for factories. The government has given coal miners permission to surpass annual quotas, will allow electricity prices to rise and has moved to limit exports of other fuels and lifted diesel imports.


In India, coal stocks at power plants are rising, though inventories still remain almost 80% lower than a year earlier. Several states are witnessing long outages and spot power prices jumped this week to a 12-year high. State-run is also continuing to divert supply away from industrial consumers, prompting complaints from sectors including aluminum producers.


“The government will do anything to prevent a widespread blackout, even if it means curtailing supplies to some other consumers,” said Somesh Kumar, leader for power and utilities at EY India.



[ad_2]

Source link