Coal India Ltd (CIL) is likely to step up its capex in 2023-24 to ramp up production and evacuation infrastructure. The State-owned miner, which accounts for nearly 80 per cent of the country’s total coal output, is mulling a price hike due to steady rise in input cost.
According to Pramod Agrawal, Chairman and Managing Director, CIL, the company has been increasing its capex on a year-on-year basis since FY20 to strengthen its evacuation infrastructure by way of first-mile connectivity projects.
CIL had spent close to ₹6,600 crore on capex in 2019-20. This jumped by more than 100 per cent to ₹13,500 crore in FY21 and was further scaled up to ₹15,400 crore in FY22. The company has earmarked a capex of close to ₹16,500 crore this fiscal.
“To increase production and evacuation infrastructure we need to invest money. The capex will be much more in the next financial year primarily for first-mile connectivity projects,” Agrawal said responding to shareholders’ queries at the 48 th annual general meeting virtually on Tuesday.
For quicker and quality loading of coal having environmental friendly benefits, CIL has identified 44 projects under ‘First Mile Connectivity Projects’, to be implemented in two phases.
In the first phase, of the planned 35 FMC projects of 414.5 million tonnes (mt) capacity, three projects of 52 mt capacity have been commissioned during FY22 and three projects were commissioned earlier making it a total of six FMC projects of 82 mt capacity in operation.
In the second phase, of the nine FMC projects of 57 mt, work has been awarded for three projects of 14 mt capacity in FY22.
CIL, Agrawal said, has not raised prices of the dry fuel in the last four years to ensure its supply at competitive prices to consumers compared with the international market amid a rise in input cost. However, prices of diesel and explosives have gone up and wage negotiations were also underway, he said, hinting at the possibility of a price rise.
However, bringing all stakeholders on board for a price hike was taking time, he added.
On listing of subsidiaries, he said, CIL is trying to list BCCL (Bharat Coking Coal) and CMPDI (Central Mine Planning and Design Institute) but there was no question of demerging them.
“A part of their shares may get listed but we are working on that. All the approvals, etc are being obtained,” he said.
Strategies for growth
With a clear emphasis on increasing production, CIL and its subsidiary company boards have approved 16 mining projects in FY 2021-22 having a sanctioned capacity of 99.84 mt a year. These projects will start contributing in the ensuing years. As many as five mining projects having a capacity of 12.60 mt a year have been completed during FY22.
The company has devised a transformational plan for operationalising 14 mines through engagement of Mine Developer cum Operators (MDO), having a proposed capacity of 165.58 mt per annum. These mines would contribute in sizeable quantities towards production in the coming years, he said.
Of these, 10 are opencast projects with total projected capacity of 161.50 mt per annum and four underground projects with total capacity of 4.08 mt. Letter of Acceptance has been issued to six of the successful bidders for these MDO projects having a total capacity of 96.74 mt, while notice inviting tender for seven more projects (5 OC and 2 UG) with capacity of 58.84 mt has been floated.
The company awarded 56 mining and transport contracts for OBR (over burden removal), coal extraction and coal transportation in addition to running contracts in FY-22.
C2C plant in Odisha
Coal India is planning to set up a coal-to-chemical (C2C) plant utilising high ash coal to produce ammonium nitrate at Mahanadi Coalfields Ltd (MCL) in Odisha. Ammonium nitrate is an important component in manufacturing of explosives, extensively used in the CIL mines.
According to Agrawal, the C2C plant would help cater to the requirement of coal producing subsidiaries. Price of explosives, one of the key input material for excavating coal, has gone up substantially, he said.
“Pre-feasibility studies were completed during the year to set up integrated Coal-to-Chemical (C2C) plants utilising low-ash coal. These plants are proposed to be located near mine heads of ECL, SECL and WCL to produce methanol, ammonia and ammonium nitrate respectively. Tendering process is on,” he said.
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