India: CIL scales new highs for coal production and dispatches in H1FY’23

The State run miner, Coal India Ltd (CIL), has registered an upbeat performance during the first half of FY2022-23 (April-September, 2022), in response to the sharp rise in power demand witnessed in the country.

Coal production by the company scaled a new high, rising 20% y-o-y to 298.98 million tonne (mnt) during April-September, 2022 compared to 249.81 mnt in April-September, 2021. This is CIL’s highest-ever output at this juncture, the previous high was recorded in FY19.

The miner tends to lower its production in the first half of the fiscal, when it liquidates the surplus inventory at the mines. In fact, major chunk of output is produced in the second half (October-March).

However, the company maintained higher production levels since the beginning of FY23 to address the concerns of thermal power plants facing critical stock levels at a time demand was rising.

Notably, barring a slowdown in August when operations were affected by incessant rains, a double-digit growth in production was recorded in each of the remaining months.

Coal dispatches grow but at slower pace

CIL played a key part in helping the power plants build up adequate coal inventory, thereby averting the possibility of repeat of the crisis seen in the previous year. As on 29 September 2022, the plants have accumulated 26.3 mnt of coal, which is around 130% higher than the year-ago levels of 11.41 mnt.

In doing this, the company’s dispatches increased 8% y-o-y to 332 mnt in April-September, 2022, but the growth rate was comparatively lower than production in the corresponding period.

Logistic constraints — led by inadequate rakes availability — pose a threat to coal supply. This situation worsens during the rainy season and this year was no different. In fact, CIL’s dispatches fell below the 50-mnt mark in September for the first time this fiscal.

Going forward, there is need for further upscaling in production to lift the inventory levels at the mines. This would be essential for catering to the requirements of the non-power sector—which has been facing a supply tightness amid prioritisation in coal supply to the power sector.

Since the beginning of FY23, the company has liquidated around 33 mnt of coal, with the current inventory falling below the 30-mnt mark for the first time since December, 2019.