India’s Domestic Coal Production Set to Continue Rising in FY24: CareEdge

India’s coal output is set to increase in FY2023-24, driven by a production ramp-up by state-owned Coal India Ltd (CIL) and NLC India Limited through the involvement of Mine Developers and Operators (MDOs). Additional production is also expected from operating and new company-owned mines, CareEdge Ratings said in a report Tuesday.

The Department of Coal has set a production target of 1 billion tons in FY24, a 13% year-over-year growth. “India’s coal production hit a new milestone of 892 million tonnes (MT) in FY23, a 14.7% YoY growth, driven by a 12.9% YoY increase in Coal India’s production,” said CareEdge Ratings.

Government initiatives such as amending the Mines and Minerals Act of 1957, allowing captive mines to sell up to 50% of their annual coal production on the open market, increasing use of mass production technologies, expanding existing projects and privatizing coal blocks, among others should further strengthen domestic coal production in the medium term.

Domestic coal consumption in the power sector remains strong, totaling 737.9 million tonnes in FY23, up 9.1% year-on-year. CareEdge Research forecasts that supplies to the energy sector will continue to rise, driven by rising demand from coal-fired power plants.

Tanvi Shah, director of CareEdge Advisory & Research, noted that while imports have increased year-on-year due to higher blending requirements, government initiatives to increase domestic production will reduce reliance on imported coal in the medium to long term. Global coal prices are expected to remain elevated compared to pre-pandemic averages, driven by high demand, particularly in China and India.

According to the report, total coal imports rose 26.18% year-on-year to 227.93 million tons in the 11-month period of FY23, with non-coking coal accounting for 65% of imports. The Ministry of Coal has auctioned 87 coal mines to date, raising estimated proceeds of approximately ₹33,200 crores. An additional 106 coal mines, including fully explored, partially explored, coke, non-coke and lignite mines, will be offered in the seventh round of auctions, which began in March 2023.

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