Coal production at Eastern Coalfields (ECL), the subsidiary of the state-owned Coal India, has been impacted due to the coronavirus-induced lockdowns, excessive rains and law and order issues at some major mines. Apart from raising output, the company has plans to gradually enter new business areas which involve alternative usages of coal. Prem Sagar Mishra, chairman and managing director of ECL, tells FE’s Anupam Chatterjee which factors affected the company’s performance in the recent past, and shares some of the steps taken by the miner to tap the growth avenues for the future. Excerpts:
ECL is the only CIL subsidiary to record negative annual growth in coal production in April-November period. What can the lower output be attributed to?
Right from the beginning of the financial year, there have been events one after another which have affected production. Apart from factors such as assembly elections and the second wave of the coronavirus, production was hampered due to record rainfalls received in ECL areas this year. The single-day rainfall of 434 mm was recorded in September, which has been the highest in at least the last 100 years. All open cast mines got inundated and water also impacted some of the underground mining projects. Our land acquisition processes also got delayed due to the lockdown as the courts and other necessary offices were shut.
Can production rise in the remaining months to ensure higher growth in FY22?
The resolution of the issue at the Rajmahal mines is crucial to the reinvigoration of our performance. Around a third of ECL’s output come from Rajmahal alone. We are facing difficulties in taking possession of the land despite us paying the compensations. There were instances where machines got damaged by the protests from local villagers and the issue could not be sorted even after the intervention of top officials from ECL, CIL and the Union coal ministry. We have estimated production losses of around 50,000 tonnes per day from Rajmahal, which supply fuel to the Kahalgaon and Farakka power plants. Supply is being made to the units from other ECL mines located in Raniganj, which are usually earmarked for e-auctions. We had to forego the attractive premium prices discovered in recent e-auctions because of these supply constraints.
When is the next hike in coal prices expected? Can you tell us which factors would determine the rise in rates?
There are numerous factors and multiple stakeholders’ interests are kept in mind while determining coal prices. Last time when coal prices were revised was back in January 2018. Both CPI and WPI has increased since then, along with fuel costs and the wages of our workers. I understand a proposal about price hike has gone to the ministry. Coal is prices in a way which fetches an earnings before interest, taxes, depreciation and amortisation (Ebitda) within a range of 28% – 30%. In the last quarter, the Ebitda had come down to around 23%.
Since the centre is charting plans regarding coal gasification, is ECL also deliberating on the options regarding alternative usage of coal?
A project for surface coal gasification with coal sourcing from Sonepur Bazari open cast project has been conceived in ECL. The project will entail estimated investment of around Rs 6,000 crore and the tender has already been finalised. Such gasification projects require quality coal, adequate land, electricity and water, and all these ingredients are present in the Sonepur Bazari area. The annual requirement of coal for this gasification project will be 1.5 million tonne for the production of 6.5 lakh tonne of methanol. We expect the project to be commissioned within FY26. A new railway siding at Sonepur Bazari has also been commissioned recently. A coal handling plant in the same place is also complete.