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Informist, Tuesday, Jan. 7, 2025

 

--Sources: Coal India may defer 1-bln-tn output target to FY27 from FY26

--Sources: Coal India may defer 1-bln-tn output target due to low demand

--Sources: Coal India document shows decline in share of coal-based power

 

By Avishek Rakshit

 

KOLKATA – Coal India Ltd. could again defer its target of producing 1 billion tonnes of coal by a year, this time pushing it to 2026-27 (Apr-Mar), due to expectations of low coal demand, sources said. Should that happen, it would be the sixth time the company would defer the target since it was announced in October 2014.

 

Coal India officials said the company was on track, as per its Coal Vision 2030 document, which lays down specific production targets for the Maharatna company for every financial year till 2030. However, they added that the company needs to make production adjustments based on market conditions.

 

According to a Coal India document based on internal demand and output projections, it is envisaged that the company will not be able to achieve its 1-billion-tonne coal production and supply target before March 2027. Usually, the targets for coal production and sales are the same for Coal India every financial year. The document has been reviewed by Informist.

 

According to the last revision in FY23, the world's largest coal miner was supposed to produce 1 billion tonnes of coal in FY26. Now, internal projections have pegged the maximum production and sales achievable in FY26 at 915 million tonnes.

 

The document states that in FY27, the coal demand in the country will touch nearly 1.5 billion tonnes. Coal India will be able to produce and supply just a little over 1 billion tonnes to cater to this demand, and captive commercial mining would make up for 228 million tonnes. The rest of the demand will continue to be met through coal imports and other sources.

 

Coal India officials said the company's output was related to coal demand in the country and even if the company gathered the means to scale up production suddenly, it would lead to financial stress if demand for coal does not increase substantially.

 

"Renewable energy is picking up pace rapidly, and even we are investing heavily on solar energy and other clean coal projects. Although India will continue to rely heavily on coal, its share in electricity generation will decrease. So, we will have to produce coal in accordance to market conditions and not rush it without any rationale," a senior Coal India official said.

 

Coal India currently has pithead coal stocks of 70 million tonnes, which some officials fear could rise to 100 million tonnes by April. The last time the company faced such a huge inventory overhang was in 2021, when power demand, and in turn coal demand, was severely affected due to the COVID-19 pandemic. Inventory pileup at mines is a major concern for mining companies, including Coal India, as it bottlenecks production, and also causes mine accidents such as fires.

 

According to the document accessed by Informist, coal-based power generation in the current financial year is expected to be around 1,285 billion units, accounting for nearly 66% of the total power production of 1,950 billion units in FY25. The contribution of coal-based power generation is expected to decline to around 62% by FY27, and to around 58% by 2030. However, in absolute terms, coal-based power generation will increase, the document showed.

 

In 2014, Piyush Goyal, then the coal minister, had said that Coal India would produce 1 billion tonnes of coal by FY19. The company, however, changed the target to FY20 and then revised the year to FY26 in FY18. In FY20, it again advanced the target to FY24, which was subsequently modified in FY23. According to the last official revision in FY23, Coal India had set the 1-billion-tonne production target for FY26.

 

For the ongoing financial year, Coal India has set a production and sales target of 838 million tonnes. Internal company projections have, however, pegged the achievable output at 810 million tonnes by March. During Apr-Dec, the company produced 561.2 million tonnes of coal, up 1.6% on year. In FY24, it produced 773.6 million tonnes, narrowly missing the target of 780 million tonnes.

 

At 1458 IST, shares of Coal India were at INR 380.15, up 0.3% on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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