Coal news and updates

Coal India to Open New Mines, expand existing to meet Demand: Chairman

Coal India, a government-owned entity, intends to commence operations at five new mines and enhance the capacity of at least 16 existing ones to meet the escalating demand for coal, as stated by its chairman. In response to surging power demands in India, which have reached record levels, coal has become increasingly relied upon, with the expansion of coal-fired power generation surpassing the growth of renewable energy for the first time since at least 2019.

Coal India, the world's largest coal miner, is poised to achieve a record output, contributing to a surge in profits and share prices since early 2023. According to Coal India Chairman P.M. Prasad, this achievement will increase inventories at power plants utilizing domestic coal by 16.1% year-over-year, reaching 40 million metric tons by the end of March.

Prasad stated that the company is set to surpass its production target for the second consecutive year by the end of March, marking a significant turnaround after missing output targets for 16 consecutive years. Coal India is aiming to increase production by over 7% to achieve a record of 838 million tons in the upcoming fiscal year starting April 1st, with initial stockpiles projected to be at 80 million tonnes, representing a growth of over 15% compared to the previous year.

Mr. Prasad announced that the miner intends to commence operations at five new mines in the upcoming fiscal year, boasting a collective annual capacity of 14.3 million tons. While Coal India has witnessed revenue growth surpassing the rise in costs in recent years, expenditures experienced a substantial uptick of nearly 20% each in 2022 and 2023. Prasad anticipates increased outsourcing of mining activities and a "natural" average annual attrition rate of 12,000-13,000 employees to aid in expense management.

Currently, the company employs more than 220,000 individuals. According to Prasad, the miner has granted nine projects to private companies with an annual capacity of 83 million tons, and two additional projects capable of producing 32 million tons are expected to be awarded before the end of March. In diversification efforts, the company has been constructing both solar and coal-fired power generation plants. Additionally, it is actively searching for lithium assets in Australia, aligning with India's objective to secure access to minerals crucial for the energy transition.

"We are participating in exploration of lithium assets in Australia that are currently under development stage, and potential long term assets", Prasad said, adding that preliminary talks with Australian companies are ongoing. Last year's decline in global coal prices from 2022's historic highs prompted Indian traders and users to increase imports of thermal coal, which rose 9.4% to 176.3 million tons in the year ended December 2023. Non-power users were avid buyers of imported coal, Prasad said.

Concurrently, reduced seaborne coal prices have led to a decrease in Coal India's margins from its typically profitable spot auction sales. Despite this, auction volumes surged by almost 80% to 73 million tons over the ten months concluding in January. The company is expected to auction approximately 20% of its output for the fiscal year ending in March, maintaining a consistent practice of offering between 10% and 20% of its production through auctions, as stated by Prasad, a veteran insider who assumed the position of chairman in July.