India: Coal India's coking coal production up by 17% y-o-y

Coal India's (CIL) coking coal production increased to 54.6 million tonnes (mnt) in FY 2023 with an increase of 17% y-o-y or 8 mnt. The miner's production for the same was 46.6 mnt for FY 2022.

Notably, coking coal production by CIL is about 90% of India's production.

This increase in coking coal production is significant since the Ministry of Coal instructed CIL to increase production to 105 mnt by 2030 in an effort to cut imports and foreign exchange spending.

Top producers

CIL's subsidiaries, Bharat Coking Coal Ltd. (BCCL) and Central Coalfields Ltd (CCL), are major producers of coking coal in the country and together accounted for almost the entire output.

BCCL alone produced nearly 62% or 33.7 mnt during the year posting 16% growth over 29 mnt of FY22.

CCL, on the other hand, saw growth of about 20% at 20.6 mnt.

Challenges

A crucial ingredient in the production of steel is coking coal. In India, there are not many mineable reserves, and the quality is too "low" to be used directly in the production of steel. In addition, Indian coking coal has a high ash concentration that must be washed before using in steel mills.

This has made imports necessary. Imports of coking coal totalled 56 mnt in FY23, which is a marginal fall of 2% as compared to FY22.

Current washing capicity

• CIL currently operates 11 coking coal washeries.
  
  
• The company's raw coking coal feed to washeries in FY23 has increased by 27% to 6.1 mnt.
  
  
• Production of washed coking coal jumped to about 2.15 mnt in FY23 compared to 1.6 mnt of FY22, a growth 34% y-o-y. Both the above performance parameters were at six year high.
  
  

Way forward

CIL has outlined a plan to produce 12 mnt of washed coking coal year with an ash concentration of 18%-19% and roughly 1.4 mnt annually with 14% ash by 2030. To achieve this objective

• 2 new coking coal washeries have been put into operation by CIL, while 3 older ones have been rehabilitated.
  
  
• Additionally, it intends to build 9 additional washeries at a cost of roughly Rs. 4,000 crores, some of which will replace the existing ones.
  
  

In the meanwhile, the miner is seeking a comprehensive strategy that incorporates these elements to increase coking coal production.

• Increased exploration of coking coal and opening of new mines.
  
  
• Improved efficiency and expansion of existing mines.
  
  
• Reviving discontinued coking coal mines on revenue sharing will provide a boost for raising coking coal production.
  
  

Outlook

In coming years any significant drop in imported coal is not expected. Imported hard coking coal is of higher quality as its ash content is at low as compared to domestic coking coal.

Moreover, the availability of higher grades of domestic coking coal is limited. Need of an hour is to constantly increase coal washing capacity.