KOLKATA (miningweekly.com) – Coal major Coal India Limited (CIL) is seeking increased transportation capacity from the Indian Railways to meet its sales target of 492-million tons for 2013/14.

According to an agreement signed between CIL and government-owned and -operated Indian Railways last week, 212.2 railways rakes per day would be made available to the miner on a yearly basis against an average of 184 rakes a year, which CIL was able to get during 2012/13.

The average growth in coal movement through the Indian Railways network was about 5.21% over the last four years while CIL had planned for a growth of 8.67% growth in coal transported by rail to be able to achieve its production target.

The agreement had set a coal production target of 482-million tons and a sales target of 492-million tons during 2013/14. During 2012/13 the production and sales targets had been fixed at 464-million tons and 470-million tons respectively.

However, with the fiscal year coming to a close on March 31, CIL was expected to miss its production target for the year by about 12-million tons.

According to data from the Railway Ministry, the railways handled 1.5-million tons of coal a day, transporting 52% of the country’s total coal production, which was forecast to increase by 58% by 2017.

However, coal transportation continued to be one of the weakest links in increasing coal production and mitigating the supply shortage in the domestic market. In fact, CIL chairperson S Narsing Rao said in a recent media statement that while the company’s mines had the potential to contribute incremental coal supplies to the country, it did not have the rail connectivity to evacuate the mined coal.

According to CIL, three of its coalfields could yield an additional 300-million tons a year with just 300 km of new railway lines across the three eastern Indian provinces of Jharkhand, Chattisgarh and Orissa.

Indian Railways was hamstrung in taking up new projects in coal-bearing provinces owing to the resource crunch, despite the fact that coal transportation accounts for around 42% of its total earnings from freight. During April and January, the railways freight earnings were estimated at $13-billion against a target of $16.5-billion.

As a result, the miner had decided to set aside $1.39-billion from its free cash reserves of an estimated $10-billion  to construct new rail linkages in collaboration with Indian Railways through a special purpose vehicle.