Economy

After a lacklustre year, coal production to record good growth in December

Pratim Ranjan Bose Guwahati | Updated on December 26, 2019 Published on December 26, 2019

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It couldn’t be a better year-end for Coal India Ltd (CIL). After a disappointing show for most of the year, the State-owned major is expected to end December with 3 per cent production growth compared to same month, last year.

One of the company’s largest open pit mine at Dipka (30 million tonne a year) in Chhattisgarh, which suffered flooding this monsoon, will come back to full production mode in about a week. The rain-fed Lilagar river changed course and flooded the mine on September 29.

With 94-95 per cent of total production coming from open pit sources, CIL is essentially an opencast miner and such mining activity slows down in the monsoon, when the haul roads (roads inside the mine pit) get slushy.

To add to the problem, the coal belt of India witnessed one of the heaviest rainfalls this year. Consequently, CIL’s monthly production which was sluggish since beginning of the fiscal, dropped below last year’s level since the second quarter.

Coal India recorded 1 per cent production growth in April. During April-June 2019, growth was as little as 0.1 per cent. However, CIL’s sluggish coal production didn’t impact power supplies as demand for electricity suffered due to general economic slowdown.

Output recovery

While the cumulative production in April-December, 2019 is likely to remain lower than the same period last year, the December output underlines a major recovery.

The current daily production at CIL is around 1.82-1.83 million tonne (mt).

The development coincided with the spike in electricity demand in December. For the first time in the last four months, coal-based power generation is ruling above last year’s level in December, indicting a revival in demand.

The coal situation at power stations is comfortable with an average of 18 days equivalent stock, as on December 23. Including 1.4 mt imported coal, the total stock at the power plant end is over 30 mt. With CIL having over 22 mt coal stored at the pithead, the pipeline is a sizable 52 mt.

If electricity demand increases gradually in the coming months, CIL will be able to meet the winter demand. A lot, however, will depend how CIL maintains the tempo in the summer.

Published on December 26, 2019
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