India: CIL aims to accumulate 68 mnt of coal inventory by FY23

State-run miner, Coal India Ltd (CIL), is expecting to maintain a coal inventory level of 68 million tonne (mnt) by the end of ongoing financial year (FY) 2022-23.

As on 23 March, 2023, the company’s pithead stock almost doubled to a comfortable buffer of 63.8 mnt as against 32 mnt assessed at the third quarter ending December, 2022.

The company tended to augment coal production in the second half of fiscal post-improvement in mining activity after monsoon. In particular, the final quarter (January-March) is the “peak mining period” in terms of production.

Following the production trend, coal inventory hit a low point towards the end of monsoon when mining activities were hampered. However, it gradually increased in the fiscal-end, when production rises.

At present, the company is producing coal at an average of 2.65 mnt/day in March, 2023, which is around 30% higher than the dispatch level of 2.04 mnt/day. In a historic feat, CIL registered coal production of 3.03 on 27 March, 2023 — which is the highest so far in this fiscal.

Benefits of surplus inventory

CIL’s projected inventory target for FY23 stands around 12% higher than the year ago level, when the company accumulated 60.71 mnt of inventory in March, 2022.

The surplus inventory paved way for better supply management in lieu of preparations for an uninterrupted power supply during high summer demand period of April-May.

Most importantly, this will provide adequate material availability for auction sales, an avenue where the company was seen curtailing its offerings to fulfill its commitments against fuel supply agreement (FSA) route.

During April 2022-February 2023, coal sales via auction route decreased by over 48% y-o-y to 51.67 mnt compared to 100.11 mnt recorded in April 2021-February 2022 period.

Overall, in FY23, CIL already attained its highest-ever coal production by recording an output of 691.33 mnt till 27 March, 2023, and is racing towards the target of 700 mnt. Notably, the year-to-date production exceeded the dispatch level of 685.48 mnt.