India plans to establish coal trading exchange for domestic market; seeks comments

The Indian government has proposed establishing a coal trading exchange that would allow companies to buy and sell domestically produced coal on the platform amid a surge in domestic production.

The coal trading exchange (CTE) will act as a many-to-many platform where buyers and sellers can bid simultaneously and make the price discovery of coal more efficient and competitive, according to a coal ministry notice March 12.

The trading exchange will also provide for clearing and settlement systems in which the exchange will act as a counterparty, the government said. The ministry has proposed that the Coal Controller Organization be the regulator for the trading exchange.

Since the current sales channels are government-owned coal companies, the trading exchange will allow commercial/captive miners a platform to market their produce, the notice said, adding that public companies may also use the platform. The move aims to promote competitive markets for the sale of coal, it said.

It has invited comments from stakeholders on the proposed Coal Trading Exchange before April 6.

India's domestic coal production has been consistently increasing each year. During the April-February period, coal production reached 929.15 million mt, up 5.5% year over year. For the fiscal year 2023-24, production totaled 997.82 million mt and is expected to exceed 1 billion mt this year, driven by a surge in output from commercial mines.

Since introducing commercial coal mine auctions in 2020, the government has allocated 184 mines, with 65 receiving permissions to commence operations. The government projects that these mines could yield 170 million mt of coal in FY24-25.

The increase in domestic coal production has led to a decline in India's demand for imported coal in recent months. The strong domestic supply has diminished the appeal for buyers to opt for imported coal amid currency depreciation. India's coal during April-December 2024 fell 8.4% year over year to 183.42 million mt, according to the coal ministry data.

Coal inventories at ports and power plants remain high, with stocks at Indian power plants reaching 55.97 million mt as of March 11, enough for nearly 19 days of consumption, according to the latest data from the Central Electricity Authority. Coal stocks at power plants have been rising both weekly and monthly.

The government expects the coal production in the country to go beyond 1.5 billion mt by 2030.