CIL’s Coal Production Slump by 52% M-o-M in Apr’20

CIL has reported a hefty decline in coal production during the month, in order to limit the excessive stock build-up at the pit head mines which has already reached an unprecedented levels.

Production by the miner had decreased 52% on the month to 40.38 MnT in Apr’20 compared with 84.36 MnT in Mar’20. Besides, it was also marked 11% lower on the year from 45.29 MnT recorded in Apr’19.

CIL generally puts the brake on production volume towards the beginning of new fiscal and focus on raising the coal supplied to its consumers to liquidate the undue stock level. However, dull demand resulting from the lock-down has made things complicated this term.

Subdued coal dispatch

Following a demand dip faced by almost all its consumers, sales volume had fallen below the 40 MnT mark for the first time in past five fiscals. (Data prior to FY16 is not available with CoalMint).

The miner had dispatched 39.09 MnT coal in Apr’20, which was down 24% Y-o-Y from 52.35 MnT in Apr’19.

Stock level continue to grow:

As a result of lower coal off-take than production, CIL’s coal stock at pit-head mines had seen a marginal rise to 75.92 MnT at the end of Apr’20 which was noted 74.56 MnT in Mar’20.

Any hope of liquidating the excess stock in hand was constrained by the weakened demand from power stations, which are already having coal inventories at record high levels. Incidentally, CIL’s attempt to clear off the massive amount of 41.1 MnT via sales through various auction schemes had witnessed tepid response, wherein only 9.06 MnT coal was booked during Apr’20.

Overburden removal only sign of relief:

In the difficult market conditions, CIL has been working on overburden removal (OBR) which involves removal of top soil to expose coal seams underneath. The miner’s OBR volume had gained a slight M-o-M increase to 114.43 Million cu. mtr. in Apr’20 as against 113.71 Million cu. mtr. recorded in Mar’20.

It is expected that CIL would continue to concentrate more on overburden removal rather than increasing production till the restrictions are lifted, only after which mining operation are likely to resume at full pace.