CIL should speed up coking coal, coal gasification projects

With nearly 100 coal mines going for commercial mining, Coal India will face its biggest challenge from the private sector, especially in thermal coal as commercial mining would mostly be for coal meant for power plants.

- J P Panda

Presently, India is importing approximately 230 million tons (mt) coal out of which coking coal is nearly 40-50 mt.

Assuming that part of the thermal coal import will be stopped due to commercial mining of thermal coal and few private sector/ cement power producers might shift their requirement from Coal India to commercial miners, Coal India might face a big challenge in marketing its coal.

It might have to lower its selling price or else lose the market.

The private sector’s cost of coal mining will be nearly half of the present selling price of Coal India and therefore it has great advantage in selling coal at lower cost than Coal India and capture the market.

Coal India will obviously lose a chunk of the market. How Can Coal India cope up with such loss?

1. It has to cut down its cost of production. The earning per manshift (EMS) of Coal India is nearly ₹1,400 where as private sector earnings might be less than half of that. Therefore departmental coal mining will be replaced by contractual coal mining

2. The present underground coal mining cost of Coal India, especially in many mines in BCCL & ECL, is more than ₹5,000 per ton and the average selling price may be ₹2,000 or even less.

Therefore, Coal India charges more money for its opencast production to compensate for the loss due to underground mining. This will force Coal India to close many more underground mines in future. Already, the underground production of Coal India has gone down sharply. Presently it is less than 10 percent of the total production.

How Coal India can remain a profit making company in future