Coal India plans for a liberalised regime
More focus on long-term supply and diversification
With the coal sector in the process of being opened to other commercial mining companies, government-owned Coal India (CIL) plans a threepronged approach. One, to retain hold on prices by, among others, tuning its marketing toward long-term supply commitments. Two, commercialise its consultancy wing’s services. This apart, a diversification plan is on, to open new revenue streams.
The Centre is expected to open 10 coal blocks for private commercial mining bids. Sources suggest four blocks each in Odisha and Chhattisgarh and one each in Madhya Pradesh and Jharkhand. CIL presently has 413 mines, producing a little over 530 million tonnes annually.
A company official said they expect the new entrants to be more interested in short-term supply agreements, leaving CIl to dominate the long-term supply auctions. Analysts, though, say as new miners enter the market, they expect a battle in short-term and spot sales. This might affect Coal India’s e-auction realisations and, hence, its profits. Although e-auction sales account for only 15-20 per cent of total sales volume, their contribution to net profit is 6070 per cent.
The CIL official conceded they’d need to watch and tailor marketing initiatives accordingly. Adding: “Given the sheer volume of our production, no other company will be able to match it. Hence, Coal India will continue to command coal prices.”
At best, he added, the new entrants to commercial coal mining would be together able to produce only five to 10 engages with the petroleum per cent of Coal India’s annual and natural gas ministry but it output. Analysts agree it has been getting consultancy will take at least four to five orders from private mining years for the new entrants to companies, too. commence operations, after The world’s largest coal completion of the auctions. miner also plans to turn itself timeThis shouldto course-correctgive CIL enough and into It a has holistic tied energycompany.up with Solar maintain hegemony. Energy Corporation of India
A liberalised coal marketing (SECL) to jointly develop 200 regime would, say CIL officials, Mw project in Madhya itself allow another revenue Pradesh, at an estimated Rs stream. Its Central Mine 1,300 crore. At a larger scale, Planning and Design Institute the agreement with SECL targets (CMPDI), one of its subsidiaries, a total of 1,000 Mw in could play a big role solar projects over different in services for exploration, parts of the country. planning and design and other “It is clear the way ahead mining needs for the sector, for the company is to diversify. including minerals in general. Coal India cannot continue to So, increased revenue rely solely on coal,” said Partha from consultancy. Bhattacharyya, former chairman
“Opening the mining sector of CIL. to other companies will It is also building four fertiliser result in these firms seeking projects in joint ventures services related to exploration with other public sector undertakings, and mining. CMPDI is already expected to open an a strong player in this field,” immediate second revenue said an official from there. channel. Also, Coal India is Lately, he added, there had now keen to venture into metals been a three-fold increase in mining — iron ore and CMPDI’s income from nonbauxite, among other — and is Coal India consultancy. in the process of identifying
Apart from being Coal the way ahead for collaborations India’s technical advisor, CMPDI and mine acquisitions.