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Commodity |
| COAL |
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| Description | Overview |
History | Coal producing
countries | Indian coal market |
Major trading centers |
| Description |
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Coal is referred to as a dark brown to black, organic and
combustible rock made of mainly carbon, hydrogen and oxygen, which
is extracted from under the ground through mining. This graphite
like sedimentary material is used as fuel and is primary source of
energy on earth. Coal is formed under the earth’s crust from the
plants and animal remains that got fossilized with the time. That
is why in other words it is also defined as the altered remains of
prehistoric vegetation that has been consolidated and transformed
with consistent effect of heat and pressure over million of years.
Coal also played an important role in industrial revolution and
most of the world’s electricity is produced using coal only.
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Overview
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Coal is a fossil fuel that is used for combustion and producing
heat and light. Currently, it is the prime source of electricity
produced through out the world. Though coal’s lead is being
shaken by the emergence of oil in the scenario but around 40% of
the electricity is still being produced using coal. The solid fuel
can be converted into gaseous or liquid form of fuel such as coal
gas, gasoline or diesel. Also coke is derived from coal that is
used producing coal tar, ammonia, light oils etc. the fuel is
credited with the initialization of the great Industrial
revolution in the 18th century.
It is estimated that there are 984 billion tons of
proven coal reserves in around 70 countries of the world. The
largest coal reserves are in United States of America followed by
Russia and China. But China leaves the above two countries behind
in the context of production. The world production of coal hovers
around 400 million tons and due to the current rising trend in the
production it is estimated to reach 7 billion tons by 2030. Asia
has a share of around 55% in the total consumption of coal in the
world, china being the topmost consumer of coal in the world. Most
of the coal is utilized in the place of its production only. The
developing countries are the major source of demand for coal, as
they need higher quantities to keep the development process
continued. The top ten coal consuming countries of the world along
with their consumption figures are
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China (1728 million tons)
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USA (1004.9 million tons)
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India (430.4 million tons)
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Germany (252.5 million tons)
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Russia (240.5 million tons)
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Japan (183.4 million tons)
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South Africa (173.7 million tons)
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Poland (144.1 million tons)
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Australia (132.7 million tons)
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South Korea (80.3 million tons)
The world trade in coal has reached a figure
of 718 million tons. Australia is the most dominant country in the
world coal market having a 2004 exporting figures of around 220
million tons. World trade in context of coking coal is limited,
Australia again bagging the largest share of supply to the market
i.e. 51%. USA, Canada and China play an important role as the
other major suppliers of coking coal. The major coal exporting
countries are
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Australia (220 million tons)
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China (120 million tons)
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Russia (75 million tons)
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South Africa (68.5 million tons)
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Colombia (49 million tons)
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United states (44 million tons)
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Canada (27 million tons)
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Poland (22 million tons)
Most of the coal reaches the world markets
through the modes of shipping and sea. Transportation of coal
forms the major cost of the cost of the coal. Majority of the
countries fulfill their domestic demand through imports of coals.
The following list shows the major importing countries of coal in
the world and their importing figures for the year 2004
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Japan (179.8 million tons)
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South Korea (78.4 million tons)
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Taiwan (57.8 million tons)
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Germany (46.2 million tons)
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United Kingdom (37.2 million tons)
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Russia (26.5 million tons)
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Canada (25.1 million tons)
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Spain (23.7 million tons)
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Italy (23.3 million tons)
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France (22.7 million tons)
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History
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Coal as mentioned earlier, is the altered form
of prehistoric vegetation transformed under
severe heat and pressure under the earth’s
crust. All this matter is believed to have
started decomposing in a period ranging from 360
to 290 million years ago, which is known as the
first coal age, the Carboniferous period. As a
consequence of all the heat and pressure that
affected the prehistoric vegetation for million
of years under the earth’s crust, it got
converted into fossil fuel.
It first came into the notice of human beings
in China where it was used in the process of
smelting copper and casting coins in around 1000
BC according to some historians. But the
earliest ever reference regarding coal was made
by Aristotle in around 350 BC who called it as a
charcoal like rock. At that time, coal had
limited number of uses and was only used for
mining purposes. But with time, and development
of technology, the new and improved uses of coal
were discovered. It took a long time for coal to
gain its current reputation. In the 18th
and 19th century, during the time of
industrial revolution, the demand for coal
started to rise. The most important invention in
the pages of history, invention of steam engine
in 1769, could not have been possible without
coal. The concept of electricity generation from
coal developed in 19th century when
it was used to produce gas for the gaslights in
many cities. This concept spread all around the
globe and the time wasn’t too far when the
first practical coal electric generating station
was set up in New York in 1882, developed by Thomas
Edison.
Recently in around 1960s, oil took over the lead from
coal as the source of primary energy but still
coal plays an important role contributing to
around 23% of the total energy needs of the
world.
History
of coal in India
The
East India Company started coal mining in India
in 1774 in the state of Bihar. Initially the
development of coal mining in India was slow and
dull and this continued for about a century. But
the introduction of steam engine in India
resulted in a boom in the coal industry. The
production of coal shot up sharply within a
short span of time and with the outbreak of the
First World War, it gained momentum. Till the
independence, the country was producing over 30
million tons of coal annually. Two companies
were set up namely National Coal Development
Corporation (NCDL) and Singareni Collieries
Company Limited (SCCL), which were government of
India undertakings, controlled the operations
related to coal in the country.
But due to the improvement in the technology,
country’s ever increasing domestic demand and
some other factors like poor labor conditions,
unscientific mining practices etc, the need of
nationalizing the coal mines arose. The
nationalization of coalmines was done in two
phases, the first phase being the
nationalization of coking coalmines in 1971 and
the second phase being the nationalization of
non-coking coal mines in 1973.
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| Coal
producing countries |
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Coal is found out under the earth’s crust and the
production is done through mining. The coal reserves
are present worldwide in every continent, including at
least 70 countries of the world. The estimated and
proven coal reserves present currently sum up to over
984 billion tons that would be lasting for around 190
years more with the present rate of consumption. The
countries having the largest coal reserves on earth
are
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United States of America
(around 250 billion tons)
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Russia (around 155 billion
tons)
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China (around 120 billion
tons)
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India (around 85 billion
tons)
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Australia (around 80 billion
tons)
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Germany (around 65 billion
tons)
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South Africa (around 50
billion tons)
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Ukraine (around 35 billion
tons)
For discovering coal reserves, a
complex method is adopted that includes the
preparation of geological map of the area in which the
presence of coal is to be checked, conducting
geochemical and geophysical surveys, and finally
exploration drilling. Only if a sufficient quantity of
coal is confirmed in the method, then only, the mine
is developed in that area. There are 2 basic techniques
through which coal is mined namely surface or open
cast mining and underground or deep mining, the latter
one used quite prominently. The world production of
coal was 5451 metric tons, the leading producing
country being China. The major producer countries in
context of coal along with their production figures
pertaining to the year 2004 are
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China (1872 million tons)
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United States of America
(1006.2 million tons)
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India (401.4 million tons)
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Australia (353.1 million
tons)
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Russia (280 million tons)
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South Africa (238.1 million
tons)
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Germany (209.1 million tons)
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Poland (162.1 million tons)
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Indonesia (135.9 million
tons)
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Greece (67 million tons)
Most of the coal produced is consumed at the place
where it is produced and nearly 18% of the coal
reaches the international market. The rate of
production of coal is rising since the last 20 years
with a total of 38% increase in the world total
production.
Production of
coal in India
India is one of the leading
producers of coal in the world as well as it is one of
the countries having the largest coal reserves. The
coal mining in India was initiated by M/s Sumner and
Heatly of the East India Company in 1774. Now for over
220 years, coal has been mined in India and the
country has reached the 3rd place in the
major coal producing countries list with an annual
production of around 400 million tons. In context of
coal reserves in India, the state of Jharkhand leads
the scenario with over 35000 million tons of coal
reserves followed by Orissa, West Bengal and
Chattisgarh. The total proven coal reserves in India
are estimated at around 85 billion tons. Most of the
Indian coal production i.e. approximately 81% is
contributed by the production in the open cast mines.
The largest supplier company of
coal in India is the Coal India Ltd that is totally a
government of India undertaking and it accounts to
almost 88% of the total coal produced in the country.
The major states that are indulged in the production
of coal in India are
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Jharkhand
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Madhya Pradesh
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Orissa
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Andhra Pradesh
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Maharashtra
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West Bengal
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Uttar Pradesh
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| Indian
coal market
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Though India is quite a dominant player
regarding the coal reserves and the production context
but still it is not traded in the domestic commodity
exchanges. The coal sector in India is largely under
the control of the government. India places 4th
in the list of the countries having the largest
reserves of coal in the world and 3rd among
the countries that produce the maximum output of coal.
Indian coal reserves are estimated at around 85
billion tons and the production of coal in India
annually is around 400 million tons. Jharkhand, Madhya
Pradesh and Orissa are the top three states in the
country that produce coal. The production level in the
country has increased sharply since the 1970s when the
production was a mere 70 million tons and is still
rising with the domestic demand.
In the list of the major coal consuming countries,
India stands at the third place. The main demand of
coal i.e. 70% demand in the country arises from power
sector. The remaining 30% of the demand comes from the
heavy industry and consumer sector. The country’s
domestic production is just enough to satisfy the vast
domestic demand. Although, India is one of the major
producers of coal, but still, the country has to
import coking coal as it produces small quantities of
it. Australia serves as the primary exporter of coking
coal to India. The import duty on coal in India has
recently been reduced to 15% from 20% showing that the
government is working on a policy to increase imports
on coal.
The government is also working on discontinuing the
public sector monopoly in the coal sector and that is
why it is seeking the private sector’s support. The
company that controls the operations of coal in the
country is the Coal India Ltd. The various
subsidiaries that come under this company are
- Central Coalfields
- Eastern Coalfields (Sanctoria)
- Bharat Coking
Coal (Dhanbad)
- Northern Coalfields (Nagpur)
- Western Coalfields
- Southern Eastern Coalfields (Bilaspur)
- Mahanandi
Coalfields (Sambalpur)
- Central Mine Planning &
Design Institute (CMPDI) (Ranchi)
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| Major
trading centers of coal |
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The major commodity exchange where the future
contracts of coal are traded is the New York
Mercantile Exchange(NYMEX).
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