Even though Coal India Ltd (CIL) is hamstrung on raising its coal production level due to lower dispatch volumes, it has managed robust growth in coking coal output in the first quarter (Apr-Jun ’21) of FY ’22.
During the above quarter , coking coal production increased 23% y-o-y to 8.85 million tonnes (mn t) compared to 7.2 mn t seen in the corresponding quarter of the previous year, with each subsidiary recording growth in this period.
Bharat Coking Coal Ltd (BCCL) was the largest coal producer with an output of 5.33 mn t, followed by Central Coalfields Ltd (CCL) which was the other major coking coal producer.
Necessity for imports
Notwithstanding the robust growth, coking coal accounted for only a nominal share in CIL’s total coal production for the first quarter, which explains the scarcity of coking grades in the country.
Notably, the company had posted a marginal rise of 2% y-o-y in total coal production to 124 mn t in Apr-Jun ’21 , where the share of coking coal was only 7%.
Moreover, the existing reserves of coking coal are inferior in quality compared to the imported grades due to which the country is forced to import to satiate the steel industry’s demand.
It is pertinent to note that the bulk of washery grades of coking coal are chiefly offered in the regular auctions conducted by the two major coking coal producers –BCCL and CCL. In fact, the premium quality-steel grade coking coal, which is in demand by the steel industry, last featured in these auctions back in Jan ’21.
Another important discovery made by the Geological Survey of India (GSI) in 2020 indicated that new coal reserves were identified solely in the non-coking coal bands, while no fresh capacity addition was witnessed in coking coal.
Latest development
Recently a memorandum of understanding (MoU) was signed between the Indian Ministry of Steel and the Ministry of Energy of the Russian Federation for co-operation in coking coal.
The pact is aimed at diversifying sources of coking coal in a bid to reduce the dependence on specific countries when coal prices are particularly high.
This was the case lately when Indian mills preferred consuming their existing inventories and refrained from fresh procurement in view of the escalating prices of Australian coking coal. Consequently, coking coal imports into the country declined to an 11-month low of 3.45 mn t in Jun ’21, as per the vessel line-up data compiled by CoalMint.
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