Total coal production may stagnate during the year given no visible improvement in availability of rakes or increase in evacuation infrastructure for mined coal.

India remains among the top-3 coal producers in the world and as per data for 2016 by IEA, overtook USA. India has been reporting growth in production to fuel its large thermal power capacity which contributes to 72% of the country’s electricity generation. However,  coal production may stagnate during the year given no visible improvement in availability of rakes or increase in evacuation infrastructure for mined coal, a ratings agency CARE Ratings said.

Coal production in India touched 688.4 million tonnes (MT) in FY18, clocking a 2.5% increase over last year’s production.

CARE Ratings view

Total coal production may stagnate during the year given no visible improvement in availability of rakes or increase in evacuation infrastructure for mined coal. We expect the total domestic coal production to grow in the range of 2.5-3.5% (705-712) MT for FY19. There is an immediate requirement to auction private coal blocks of coking and steam coal for 50 MT per annum, in order to control import of steam and coking coal.

Total import of coal including coking coal and steam coal could touch 235-245 MT if the government approves an order to ban use of pet coke which is a feedstock in cement industry. Additional 35- 40 MT of imported steam coal would be required to compensate for the pet coke ban.