China's increasing demand for imported coal might pit it against India, whose coal imports have surged exponentially. In December, India boosted coal purchases from South Africa alone by about 54% from a year earlier.

While India imported 36.1 million tonnes of coking coal in 2010, a 33% year-on-year jump, China's coal imports rose 31% in 2010, to 165 million metric tonnes, according to available data.

Analysts are of the view that volume will continue to grow in both the countries. Of the 690 million tonnes of global coal trade volume in 2009, China and India accounted for 27%, they said.

Incidentally, China was a net coal exporter in the decades before 2007. In 2009, China imported 126 million tonnes of coal and exported 22 million tonnes. Those imports accounted for more than one fifth of the world's total coal trade. 

Reports indicate that China's coal imports surged 114.3% year-on-year to 68.98 million tonnes in the January to May 2010 period on the back of strong industrial demand.
 
In the case of India however, thermal coal imports for November 2010, dropped to 5.3 million tonnes from the record 6.4 million tonnes imported in October. The fall, at that time, was attributed to increased domestic production throughout October and the rising cost of imported thermal coal.

Given the fact that the country's domestic production is expected to fall severely short of target due to environmental clearance hurdles and land acquisition problems, India's coal imports are set to jump 70% in the next fiscal, according to the coal minister Sriprakash Jaiswal.

At a meeting on Thursday, the Group of Ministers, headed by India's Finance Minister Pranab Mukherjee, decided to work out a solution to the complex issues of coal blocks, which has become a subject of dispute between the Coal Ministry and the Ministry of Environment and Forests. 

Last year, the Environment Ministry had prohibited mining in certain areas, where the forest cover was 30%. The ministry disallowed mining in 203 blocks with the potential of producing 660 million tonnes of coal a year.

Despite being the third largest producer of coal in the world, India had to import over 72 million tonnes to meet domestic demand in the last fiscal year, said an official with Coal India. Out of the total installed power generation capacity of 159,000 MW, almost 50% is based on coal, he pointed out.

As demand for the fuel rises and floods in Australia disrupt supplies, traders insist that coal producers across the globe have been looking to ship coal to the Asian majors, China and India.

``Economic growth in Asia is outpacing the rest of the world. Both the countries desperately require coal,'' said Surya Hiranandani, coal analyst with Mumbai-based broking firm Angel Broking.

``Dire weather conditions would also ensure that around 15 million tonnes of coal could be lost from Australia, South Africa, Colombia and Indonesia. As a consequence, coal prices are set to rise by 30%,'' he said.

He also alluded to an earlier report by the US Energy Department in Washington which said that shipments from the United States are poised to rise 8.8% this year to about 86.5 million tonne, the most since 1996.

India's domestic coal production is expected to fall short by 142 million metric tonne in the year starting April 1, 2011. Coal demand in the next financial year is expected to be 696 million metric tonne as compared with domestic output of 554 million tonne. 

Coal Minister Sriprakash Jaiswal said the shortfall in the 2010-2011 annual plan was estimated at 83.33 million tonne.