Commercial mining won’t unsettle us: Coal India chief

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Coal India Ltd (CIL), which had registered a laggard growth in both production and offtake during the beginning of this fiscal, has been witnessing a pick-up in the growth momentum since August-September. The company is hopeful of surpassing last year’s production of 602 million tonnes (mt). Pramod Agrawal, Chairman and Managing Director, CIL, said the opening up of the coal sector to commercial mining will not unsettle CIL’s role. Excerpts:

CIL has been witnessing a rise in both coal production and off-take since the month of August-September. Do you think this momentum will sustain? Where do you see closing this year in terms of production and off-take?

The growth momentum was sustained in October with 19 per cent and 25 per cent, respectively and the trend continued in November as well. We are optimistic of surpassing last year’s production of 602 mt going by the way the economic activity is panning out. Our over burden removal (OBR) held on to the growth constancy since the beginning of the fiscal, ending November with a growth of 21 per cent. So, the coal seams are exposed and ready for extraction.

Supplies are dependent on demand upsurge. We have created conducive conditions for our customers to lift increased coal, which did help in improved offtake. But the actual demand is determined by the market behaviour and if the demand is up we are confident of meeting it and close the year with more sales than year ago.

The demand from power sector still seems to be lacklustre and even in November a fair share of your demand came from the non-power sector. Is this good to offset the lower demand from power sector?

Power sector constitutes nearly 80 per cent of our total offtake. Though non-power sector is showing healthy appetite with increased coal lifting, it would not be feasible for it to fill in the demand vacuum left by the power sector fully. After a 14 per cent spurt in October, power sector growth flattened again in November. But, we expect the demand from power sector to find its tempo soon.

What are your plans to boost sales?

We could achieve a 30-mt volume increase in e-auction booking at 68.3 mt till November, by a perceptive plan of keeping reserve price close to zero during the first six months of the fiscal to boost sales.

Special spot auction for coal importers, introduced in October, saw a booking of five mt in two months. We shall offer increased quantum under auction schemes and there is a strong probability of our auction sales going over 100 mt during this fiscal. We are planning to enhance the non-power sector customer base through linkage auctions.

You had earlier commented that CIL is not likely to be impacted by opening up of the coal sector to private players for commercial mining. Can you please elaborate how?

Key issues that will help us stay ahead of the competition are established infrastructure, streamlined operations, uniform coal quality, cost efficiency in production and reliable timely delivery of supplies.

We hold close to 53 per cent of the country’s entire coal resource base of 329 billion tonnes. We also own high-grade mines with favourable stripping ratio that makes our coal cost highly competitive. Commercial mining will not unsettle CIL’s role.

What is your plan to scale up production?

We have devised a transformative plan to engage Mine Developer cum Operators which will help in technology infusion and bring operational efficiency. As many as 15 greenfield projects have been identified for the purpose. We are also fast tracking procurement of higher capacity modernised equipment to ramp up our OC production.

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