Coal India subsidiary North Eastern Coalfields Ltd. (NECL) has initiated coal sales after a hiatus of almost two years, with the latest auction scheduled for 30 Mar’22.
This came days after the company started production after operations were temporarily suspended due to environmental concerns since Jun’20. As per sources, the miner is yet to resume full-fledged operations, currently operating a few mines in the initial phase.
Notably, unlike other CIL subsidiaries, NECL’s capacity is small-scale capacity but it produces premium grades of non-coking coal.
The offered volume of 42,000 t comprises high-calorific value coal of grades G1-G3, entirely from its Tikak colliery. As per the pricing mechanism, the floor (reserve) price for the coal is set by adding a fixed charge over and above the notified price.
Quantity in t | Prices in INR/t
Bid prices soar on tight supply
Recent auctions held by CIL subsidiaries have received overwhelming response as prioritisation in supply to the power sector via Fuel Supply Agreements (FSAs) has compelled buyers to aggressively procure coal via auctions.
Supporting the elevated demand, the introduction of a single window for auction sales has boosted bid premiums to record levels, encouraged by wider participation that includes the likes of traders.
Snapshot of auctions held in Mar’22
Quantity in t
In particular, Mahanadi Coalfields (MCL), South Eastern Coalfields (SECL), Northern Coalfields (NCL) and Eastern Coalfields (ECL) fetched a premium in excess of 300% over the notified price.
The trend is expected to continue in the forthcoming auction of NECL, with buyers showing renewed interest for domestic coal which, despite being on the higher side, is still cheaper than imported material.
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