Both the steps taken in a span of less than 13 months have made the Broach lignite costlier than that mined in Kutch by Rs 170 per tonne. But, it is considered to be part of the company's well throughout long-term logistic move.The blue-chip company with absolute mining rights of lignite in the state produced about 50 lakh tonnes per annum (tpa) of the fossil fuel, mainly for power generation, besides textiles, ceramic and other industries.

The bulk of lignite is mined in Kutch, the prevailing rates being Rs 410 per tonne for A-grade (330 kcal/kg) and Rs 390 per tonne for B-grade (250 kcal/kg). The Broach mines produced only one variety of lignite.

In increasing the Broach lignite price, GMDC has taken a risk of being nearer to the customers. Whereas, the Kutch lignite price was reduced last year to stay float against cheaper imported coal. According to GMDC managing director Ashok Narayan, the actual cost of mining lignite in Broach is much higher as the seams are buried deep under the surface. It is expressed in the ratio of 1:9, meaning to mine every 1 cu m of lignite, excavators have to scoop out 9 cu m of earth. In open cast mines of Kutch, the ratio is 1:2.

Yet, distance-wise, lignite mined in Broach has comparative cost advantage over that in Kutch. It is only because the same commodity is mined by one agency that GMDC could somewhat compensate higher costs of mining in Broach by lower costs in Kutch.