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Coastal shipping of coal would slash costs

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World Coal,

Increasing coastal shipment of coal in India would result in significant transportation cost savings, a new report for the Indian Ministry of Shipping and Indian Ports Association has found.

The report looks into the impact of the Sagarmala project, an ambitious port-led infrastructure development programme that aims to take advantage of India’s extensive coastline, on various sectors – including coal.

“With the right infrastructure and institutional support, the movement of coal via coastal shipping could increase nearly sixfold from the current 23 million tpy to almost 125 to 230 million tpy by 202 and around 190 – 200 million tpy by 2020,” the report concluded. “

It concludes that coal logistics costs could be reduced by INR70 billion (US$1.04 billion) per year, as well as reducing pressure on India’s already-overstretched railways and driving down the price of power at coastal coal-fired power plants.

“The coal of coal logistics contributes about 30 to 35% to the per unit cost of power generation,” the report said. “As a result, shifting coal movement from rail to coastal shipping via ports for the relevant coastal thermal and steel plants can significantly lower the per unit cost of power generation in India.”

Thermal coal shipments currently comprise half of all rail traffic and 24% of port volumes. Despite this, growth in the transportation of coal is lagging behind production growth and poses of significant bottleneck in India’s coal supply chain.

The problem is particularly acute in the rail sector, which has only grown its coal capacity by 0.7% year on year, despite production growth of 6 – 7%.

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