April coal output falls 16.5% to 46.5 MT

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Published: May 20, 2020 7:52:28 AM

The development comes after all India coal production inched up 0.05% in FY20, the lowest growth rate in at least 20 years, to 729.1 MT.

April coal output, coal production in april, power plants, Nirmala Sitharaman, coal mining, electricity demand, CIL, domestic demand of coalCoal companies have to moderate production according to offtake, as coal cannot be stockpiled beyond a certain quantity without the risk of catching fire.

Coal production in the country fell 16.5% year-on-year (y-o-y) to 46.5 million tonn (MT) in April with output from Coal India (CIL) falling 11%, SCCL by 46% and captive production dropping 37% annually to 40.4 MT, 3 MT and 3.1 MT respectively, as power plants did not lift the fuel from the mines in the wake of low electricity demand.

The development comes after all India coal production inched up 0.05% in FY20, the lowest growth rate in at least 20 years, to 729.1 MT.

The dismal growth rate is the result of Coal India’s production decreasing 0.8% y-o-y to 602.1 MT in FY20, mainly due to excessive rainfall hampering mining operations during the monsoon earlier this financial year, coupled with law and order disturbances in some major mines, and several employee union strikes.

In the wake of power demand slowing down due to muted industrial and commercial activities amid the lockdown to contain the coronavirus, power plants currently have coal stocks of about 51 MT which can sustain them for 30 days. Since power plants are not very keen to lift coal as of now, it raises the risk of CIL output coming down second year in a row. Coal companies have to moderate production according to offtake, as coal cannot be stockpiled beyond a certain quantity without the risk of catching fire.

With reduced domestic demand of coal, CIL has shifted its focus to overburden removal — the process of removing the top soil and rock to expose coal seams in its open cast mines — with the company removing 114.43 million cubic meters of over burden in April, 10% more than a year-ago period. This will enable CIL to accelerate coal production whenever the demand picks up and supply the fuel at short notice.

Going the whole hog in ushering in unrestricted commercial terms in India’s long-state-dominated coal mining business, the government on May 16 sought to buttress the policy liberalisation steps announced for the sector over the past couple of years.

Finance minister Nirmala Sitharaman said that 50 coal blocks will go under the hammer soon for commercial mining, and the government seeks to make/facilitate infrastructure investments to the tune of Rs 50,000 crore to ease evacuation of coal from pitheads.

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