Commercial Coal Mining Webinar: Key Takeaways

SteelMint Events concluded yet another round of insightful webinar, the latest one being covered on the topic "Commercial coal mining reforms: New beginning or non-starter".

The event was graced by the presence of Mr. A K Jha (former Chairman, CIL), Mr. Somesh Vishwas (Chief Raw Material Strategy Group, Tata Steel) and Industry Veteran Mr. V K Arora (Chief Mentor, KCT Group).

Although there was plethora of discussion made on the topic, we have summarized some of the key points from the webinar.

*Commercial mining is a welcome step taken to minimize imports, and would significantly reduce the burden on CIL who has been operating several mines which are not financially viable.

*Response to the auction can be considered tepid given the fact that no participation from foreign players was seen in spite of the 100% relaxation being provided on FDI.

*Of the total bids received in the technical round, participants from power, steel and cement industries accounts for the major share who have assured 60% captive off-take which implies only 40% would be sold in the open market.

*Complexity in NCI mechanism has made it difficult to evaluate the financial model for the auctioned blocks at a time when coal as a whole is losing strength due to growing footprints of renewables.

However, logistics and transportation cost effectively brought down by procuring near-by blocks could increase the profitability of the captive end-users.

*Coal benefication can play a major role in upgrading the quality of the low grade coal, failing to which direct replacement of imports is not possible. But, its development has been sluggish in view of the subdued demand for washed coal from the customers.

*High inventories at power plants and CIL despite the slowdown in production indicate distortion in consumption pattern wherein coal requirement for power generation has not picked up to the extent it was expected.

*Apart from the revival in demand from power sector, the country would need additional coal requirement by encouraging import substitution and commissioning the stressed projects in order to build a platform for catering the elevated coal supplies that have been planned.