CIL’s coal production drops to 6-year low in Sep

Coal India Ltd’s monthly coal production dropped to a record low in the month of September as it settled at 30.77 million tonnes

New Delhi: Coal India Ltd's (CIL) monthly coal production dropped to a six-year low in the month of September as it settled at 30.77 million tonnes (MT). The state-run miner said that coal production declined because mines were flooded due to the heaviest rains in the last 25 years. This hindered shipments, Coal India said.

24% drop in coal production

The Kolkata-based miner recorded a 24 percent drop in coal production in September when compared to the corresponding period a year ago. According to a stock exchange filing, shipments dropped 20 percent to 35.18 million tons, the lowest in five years.

Squeeze in supply inflating import bills

The decline in output and shipments at Coal India has caused a squeeze in supply. It has impacted coal delivery to customers, including power plants, aluminum smelters and cement companies. Coal inventory at power generating plants has dropped to a nine-month low, inflating import bills.

Dikken Mehra, a spokesman for Mahanadi Coalfields, a unit of Coal India, said that output at Coal India's Talcher coalfields in Odisha is yet to return to its full potential, as its Bharatpur mine remains closed since an accident in July.

Monsoon and strike to blame

"This year, the monsoon has been unusually long and that has affected output at mines," said Rupesh Sankhe, an analyst at Elara Securities in Mumbai. "The workers' strike last month also caused output disruption. The target of 660 million tons production this fiscal looks steep.
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The backdrop

The news comes a month after the government introduced 100 percent Foreign Direct Investment (FDI) in the coal mining sector. The move is said to be aimed at boosting coal production by opening the sector for competition from global players. India has one of the largest coal reserves in the world and yet has to rely on imports to meet its requirements.