Coal India Ltd (CIL) failed to register any significant growth in production during Sept’21 as mining operations remained affected by the monsoons.
The miner reported a marginal rise in production by 0.4% y-o-y to 40.07 million tonnes (mn t) in Sept’21 compared to 40.5 mn t in Sept’20, while the volume fell 5% m-o-m from 42.6 mn t in Aug’21.
Notably, all the coal producing subsidiaries, except Northern Coalfields Ltd (NCL), witnessed a decline in monthly output, which weighted down CIL’s overall production.
The impact of the monsoon was also seen in CIL’s overburden removal (OBR) as it fell to a 13-month low of 88.06 million cubic metre in Sept’21.
This comes against the backdrop of depleted coal stocks at thermal power plants due to an increase in electricity demand following the revival in economic activities.
At the end of Sept’21, coal inventory at power plants declined 37% m-o-m to 8.08 mn t from 12.76 mn t in Aug’21.
Indicating the worrying state of the power sector, 104 of the 135 power plants being monitored by the Central Electricity Authority (CEA) have coal stock levels lesser than 9 days as on 30 Sept’21.
Uptick in dispatch
Despite low production, CIL maintained higher dispatches by supplying the excess inventory available at the pit-head mines. It is worth noting that CIL had commenced Sept’21 with an opening stock of 49.65 mn t.
Dispatches, on a m-o-m basis, fell slightly to 48.42 mn t in Sept’21 compared to 48.73 mn t in Aug’21. However, on a d-o-d basis, there was improvement in dispatches to 1.61 mn t/day in Sept’21 against 1.57 mn t/day in Aug’21. The reason was the lesser number of days in the previous month compared to August.
On a yearly basis, dispatch volumes increased 4% y-o-y from 46.46 mn t in Sept’20 as the miner is under pressure from the government to resolve the prevailing coal shortage issue.
The situation at the power plants remains critical as prolonged outage from several power plants along with lesser rake movements, is compelling the remaining plants to raise their generation schedule.
Outlook
The gradual rise in global coal prices has led to curtailment in power generation by plants using imported coal, adding to the pressure on utilities using domestically mined coal to ramp up output.
Besides, the non-power sector has also been crying foul over lesser supplies in the wake of additional volumes being diverted to the power sector.
CIL’s performance is expected to improve post-monsoon from Oct’21. However, critical stock levels recorded at power plants show that the situation is likely to continue in the near-term, keeping the demand for domestic coal strong in the process.
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