Coal India negotiating long-term contracts to insulate Indian consumers from any volatility in global coal prices

State-run Coal India (CIL) is negotiating 10-year contracts with overseas suppliers in an attempt to insulate Indian consumers from any volatility in global coal prices.The company is in advanced talks with suppliers in Australia, Indonesia, South Africa and the US for securing coal at 10% discount to the global benchmark price, its chairman N C Jha said."We hope to import at least half of the total contracted quantity during 2011-12, for which contracts will be signed in the next few weeks," Jha said. "The quantity supplied in the first year will be gradually increased on the basis of the rise in domestic demand and the number of additional fuel supply agreements we sign."

CIL is aiming to import at least 30 million tonnes of coal in fiscal 2011-12, Jha said. CIL is in negotiations with global firms such as Rio Tinto, Xstrata, Anglo American, Peabody, Massey Energy, Arch Coal, Murray Energy and Sinarmas.CIL has been planning to import coal for domestic power companies for the last couple of years. It had entered into talks with state-owned importers but did not import any coal since it did not receive adequate confirmed responses from domestic consumers. The company now plans to import larger quantity of the fossil fuel as its expansion plans have been severely hit by factors such as new pollution norms and law and order issues at some of its mines.