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Coal India Ltd (CIL) does not expect to witness any adverse impact on its production and profitability due to the opening up of the coal sector to private players for commercial mining.
Commercial mining would, in fact, complement the company’s efforts to shore up the country’s indigenous coal output and would not “unsettle it”, said a CIL press statement.
“Commercial coal mining is not going to adversely impact the production or profitability of the company. Key issues which will help improve to stay ahead of the competition include uniform quality of coal, cost efficiency in production and reliable timely delivery schedule. The introduction of a higher degree of mechanised mining and increased supplies are other focus points,” said Pramod Agrawal, CIL Chairman, in the release.
Private participation
The auction process for 41 coal blocks for commercial mining, which was recently launched by Prime Minister Narendra Modi, is expected to open India’s coal sector to private players. Considered a major step towards the country’s goal of achieving self-reliance, the auction of mines for commercial mining is expected to garner close to ₹33,000 crore of capital investment over the next five-to-seven years. It is also expected to bring down imports.
India imported 243 million tonnes (mt) of coal in 2019-20, which is about one-third of its domestic output of 729 mt. With an annual production of close to 602 mt, CIL accounts for nearly 83 per cent of the country’s total output.
CIL, under its fold, holds close to 54 per cent of the country's entire coal resource base of 319 billion tonnes (bt). The government recently allocated 16 blocks to CIL, which saw its resource capacity swell by around 9 bt to 172 bt. Of these, WCL and BCCL account for five blocks each; ECL has three blocks whereas two belong to CCL and one to MCL.
“Irrespective of impending competition, CIL, over the years, has been working on tightening its belt, in becoming a cost efficient producer, in lowering the cost per tonne of coal produced and focussing on improved quality of coal supply. These factors will determine the sale of coal in the competitive environment,” the release said.
The company’s advantage in terms of core competence, skilled human resource, established infrastructure, streamlined operations, infusion of capital in upgrading the technology and evacuation logistics, robust coal resource base and a slew of consumer friendly measures would help give it an edge, it added.
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