India to increase coal output to reduce dependence on imports

India is likely to ramp up the output of domestic coal to solidify energy security and reduce the dependence on fossil fuels imports, said Moody's Investors Service.

The government recently mandated CIL to carry out coal imports as an emergency measure to tackle the shortage of coal for India’s power utilities and store the buffer stock.

Moody's Investors Service said that large coal-importing countries including China and India will seek to increase their domestic coal production for enhancement of energy security and reduction of their reliance on coal imports. Chinese coal production has increased by 15% in March 2022.

Coal India Limited aims to increase its production by approximately 12% in the current year. The state-owned firm has a share of over 80% of India's coal output.

Moody's Investors Service further stated that the metallurgical and thermal coal prices will continue to be high. However, the supply constraints have been steady.

The copper, zinc, nickel, and aluminum prices reflect low inventories and supply risk. Supply had been tight before disruptions from the military conflict and will remain constrained. Steel and raw material prices are also reducing as panic buying is reducing.

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