by ajoy k. das
Despite the spread of the coronavirus (COVID-19) across the country, lockdowns and a severe hit to industrial production, coal production by state miner Coal India Ltd. (CIL) continued, although long-term plans of overseas asset acquisition and auction of coal blocks for commercial mining are expected to be stalled by the virus.
Even with the Indian and state government coming down heavily to impose complete lockdowns across towns and cities, CIL on March 20, achieved its highest-ever single-day coal production of 3.17 million metric tons (mt).
In fact, the rise in coal production has been so steady that dry fuel stocks with thermal power plants across the country during March recorded the highest-ever level of 39.5 million mt, with average inventory of the plants equivalent to 23 days consumption of coal and not a single power producer reporting critical or super critical level of fuel stocks, also a first in recent years.
According to a CIL official, despite challenges of ensuring the protection of all miners from COVID-19, the company has been able to optimally operate all its coal mines and coal production has been rising over the past several weeks and stocks at pitheads were “comfortable” and coal was being offered to all consumers through long-term contracts, spot and forward e-auctions.
During February, CIL achieved a 14% production growth at 66.3 million mt compared to 58.1 million mt in the corresponding month of the previous year. During the first nine months of the current fiscal year, the miner recorded declines in production in consecutive months, but sharply reserved operations there after. It posted growths of 7% in December, 10% in January and 14% in February with aggregate production of 517 million mt during April-2019 to February 2020.
CIL has been able to maintain daily operations during the countrywide lockdown. Other industries are either lowering or halting capacity utilizations, and the spread of the virus and stringent public health measures imposed by the government is taking a toll on the miner’s strategic plans.
The miner has deferred its annual stock measure exercise scheduled for April 1, following government directive and cancellation of all train movement across the country, as the stock measurement entailed engaging external agency involving traveling across 300 mines of its seven wholly-owned operations subsidiaries. One of the options under consideration is deployment of drones to measure stocks.
But most importantly, the virus spread has brought to a halt, CIL’s search of coal assets identified in Australia, Russia and Canada.
Sources said the state miner has not been able to appoint a merchant banker/financial advisor to act on its behalf to conduct due diligence on identified coal assets in these countries. The appointment of a merchant banker/financial advisor has been hanging fire since last year and now with complete travel ban imposed across geographies, such an appointment did not seem possible in the immediate future.
