India’s domestic coal production to continue to rise in FY24: CareEdge
India’s coal output will rise in financial year 2023-24, driven by a ramp-up in production of state-owned Coal India Ltd (CIL) and NLC India Limited by engaging mining developers cum operators (MDOs). Incremental output is also expected from the operational and new captive mines, CareEdge Ratings said in a report on Tuesday.
The coal ministry has set a production target of 1 billion tonne in FY24, a 13% growth year-on-year (y-o-y). “India’s coal production reached a new milestone of 892 million tonne (MT) during FY23, a 14.7% y-o-y growth, driven by a 12.9% y-o-y increase in production by Coal India,” CareEdge Ratings said.
Government initiatives, such as amending the Mines and Minerals Act of 1957, allowing captive mines to sell up to 50% of their annual coal production on the open market, increasing the use of mass production technologies, expanding existing projects, and privatizing coal blocks, among others, are expected to continue bolstering domestic coal production in the medium term.
Power sector consumption of domestic coal remains strong, accounting for 737.9 million tonne of total despatches in FY23, a 9.1% year-on-year increase. CareEdge Research forecast that despatches to the power sector will continue to rise, driven by increasing demand from coal-based power plants.
Tanvi Shah, director of CareEdge Advisory & Research, noted that while imports have grown compared to last year due to higher blending requirements, government initiatives to boost domestic production will reduce reliance on imported coal in the medium to long term. Global coal prices are expected to remain elevated compared to pre-pandemic averages, driven by high demand, particularly in China and India.
According to the report, total coal imports increased 26.18% year-on-year to 227.93 million tonne during the 11-month period of FY23, with non-coking coal constituting 65% of imports. The coal ministry has auctioned 87 coal mines to date, generating an estimated revenue of approximately ₹33,200 crores. Another 106 coal mines, including fully explored, partially explored, coking, non-coking, and lignite mines, are being offered in the seventh round of auctions, which began in March 2023.