KOLKATA (miningweekly.com) – Starting the new financial year with a shift in focus from coal production to distribution and supplies, State-owned miner Coal India Limited (CIL) will invest $3.08-billion over the next five years to achieve full self-sufficiency in transportation of the dry fuel.
Coal Minister Piyush Goyal said in a statement that CIL had shown interest in reducing its dependency on government transporter Indian Railways for movement of coal and the investment on logistics would enable the miner to own at last 1 700 railway rakes and be in full control of distribution of coal across the country.
He said that the government was even willing to go the extra distance in offering a “good rate of returns”, if private miners were interested in building their own railway lines and own wagons, adding that currently 14 railway lines were under construction to act as dedicated lines for coal freight transportation.
CIL said that in the current financial year the focus would shift from purely achieving production growth to preventing stock piling up beyond regulatory limits.
According to a CIL official, stock pile-up ultimately impacted on the bottom line as such stocks deteriorated in quality, and volumes were reduced by self-ignited fires during the summer months. A situation like at the close of last financial year when the miner was carrying stocks estimated at 54-million tons against a norm of 22-million tons, needed to be avoided.
Commenting on the coal shortages at thermal power plants, he noted that plants located near coal pitheads were not facing any fuel shortage, and only those at a distance faced critical levels of fuel stocks, clearly indicating that logistics and transportation were the reasons for the shortage.
Industry analysts pointed out that the shift in focus would improve the profitability of the miner, considering the fact that stocks were piling up even after CIL was missing production targets, which meant that continued focus on achieving production growth would lead to a situation of “the more you produce, the more you lose”.
Provisional figures released by CIL show that the miner produced 567.37-million tons during 2017/18, achieving 95% of the production target set by the Coal Ministry and a 2.4% growth in production over the previous financial year.
Offtake growth during 2017/18 was recorded at 6.8% with analysts maintaining that stock pile-up despite offtake growth was an indication that the miner still had enough headroom to ramp up distribution and higher sale revenues.