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Coal India likely to miss annual production target

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World Coal,

Coal India Ltd (CIL) may have finalised a blueprint to reach production capacity of 1 billion t of annual output by 2020, but the world's largest coal miner has continued to falter on both production as well as supplies recently.

CIL recently reported a provisional production of 47.98 million t in February against the target of 46.58 million t, a growth of 3%.

The monthly figure, however, belied its performance with an output in the 11 month period at 436.96 million t, 3% below its same period target of 450.14 million t.

While offtake, or actual lifting of coal by consumers, at 43.17 million t in February came close to the target of 43.34 million t, for the year-to-date period, supplies at 441.85 million t are well below the target of 469.92 million t.

Over the corresponding 11-month period of the previous year, there has been marginal positive growth in both output and supplies at 6.8% and 3.5% respectively, figures revealed by CIL showed.

With anannual production target of 502 million t, CIL has to produce 65 million t in the terminal month of March, which means a sequential growth of 35% over what was achieved in February, analysts said.

CIL figures came in when coal and power minister Piyush Goyal said on the floor of Parliament that the government is monitoring domestic production of coal at regular intervals to avoid shortages.

"Multi-dimensional efforts are underway by the ministry of coal to enhance production of domestic coal beyond current year's target in order to bridge the shortfall in availability of indigenous coal," Goyal said in a written reply to the Rajya Sabha.

The saviour for the domestic power sector is the global coal market, which continues to remain depressed as not-so-encouraging news continues to flow from main consuming markets, making imports not a difficult proposition, analysts said.

"FOB price of 6000 kilo calorie coal from South Africa now rules at US$64 a tonne, which was US$74 a year back. There has been no discernible movement in recent times," a coal analyst with mjunction said.

In China, the world's largest coal producer, consumption and production fell 3% last year for the first time in 14 years, according to fresh government data, that would weigh heavy on the global coal market.

CIL, however, has initiated a process to make long-term investments to augment supplies to users, particularly by creation of railway infrastructure.

"In the meeting held on February 27, the board considered the project report on East Rail Corridor Railways Project for the construction of a rail line at Chhattisgarh and accorded its approval to first year expenditure," CIL said on Monday.

Adapted from press release by Joe Green

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