CIL Plans to Shut About 100 Un­prof­itable Mines

Co now has 394 mines, of which about 15 are highly prof­itable

The Economic Times - - Companies: Pursuit Of Profit - De­b­joy.Sen­gupta @times­group.com

Kolkata: Coal In­dia will shut nearly 100 un­prof­itable mines over the next two-three years. Of this, 37 will close op­er­a­tions this year. Last year, Coal In­dia closed down over 15 mines. A re­cent study showed that about 15 mines are highly prof­itable and 90 oth­ers can be made prof­itable. “We have en­gaged In­dian School of Mines and ex­per­tise of Sin­gareni Col­lieries to chart out a roadmap for the set of 90 mines,” a com­pany ex­ec­u­tive said. “They would sub­mit their study soon on the ba­sis of which we would either merge a few of th­ese mines with ex­ist­ing ones or change the method of op­er­a­tions in th­ese mines.” He said open­ing new mines and shut­ting un­vi­able ones is a con­tin­u­ous process. Coal In­dia be­gan with 750 mines but now has 394. Low grade coal ex­tracted from mines that pro­duce less than one mil­lion tonnes a year are gen­er­ally con­sid­ered un­prof­itable as the scale of op­er­a­tion in them do not sup­port the cost in­volved visà-vis the price its coal fetches.

“Cost of op­er­a­tions at un­der­ground mines is also very high,” he said.

Coal In­dia has also been re­cently hit be­cause the Coal Con­troller of In­dia down­gra- ded 50% of its 394 mines, mean­ing they are fetch­ing lower prices for the coal pro­duced com­pared to what they were fetch­ing in 2016-17. “Down­grad­ing of mines has also hit vi­a­bil­ity of a large num­ber of mines, which are now be­ing con­sid­ered for clo­sure,” an­other Coal In­dia ex­ec­u­tive said.

Coal In­dia ex­pects a hit of about .₹ 10,000 crore an­nu­ally as a re­sult of down­grad­ing. The Coal Con­troller has also de­cided to keep a con­stant vigil on the qual­ity of coal Coal In­dia de­liv­ers and would be con­duct­ing reg­u­lar stud­ies on the qual­ity of coal it is de­liv­er­ing visa-vis its de­clared grade.

In­creas­ing salaries and wages of work­men have also added to the costs to coal, which has af­fected vi­a­bil­ity of a few mines. At present, more than 50% of the cost of pro­duc­tion is work­men salaries.

BLOOMBERG

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.