Coal India may Increase the Prices of all Grades of Coal in the Coming Months Due to Rising Mining Cost

Coal India Ltd., the country's largest coal miner, expects feedstock prices to rise in order to maintain commercial momentum while addressing inflationary problems. Coal India is attempting to reach an agreement with its stakeholders on the matter.

Whilst they did not specify the amount of increase necessary, signs are that Coal India will be content with a 10% increase, comparable to what it had in 2018.

According to industry officials, a price increase is necessary not only to sustain profitability but also to ensure adequate supplies are significantly available to contributing to meet the country's coal demand.

Foreign pricing, which is four to five times greater than our price, is not the trigger. What we're looking at is some sort of pricing rise to compensate for any inflation that has occurred after the last hike in 2018.

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Coal India, which last raised coal prices in January 2018, has been emphasising the need for a price increase to fully compensate for growing inflation, which has resulted in a cost-push, particularly for diesel and explosives, as well as a pay increase.

CIL's net profit increased by over 69% for the quarter ending December 31, 2022, owing to higher realisations, primarily from sales via the e-auction platform. This significant increase in profit resulted from a greater add-on over the notified price in the e-auction sale of 14.65 million tonnes (mt) of coal during the current quarter.

Yet, in the future, a price increase would be necessary to ensure the financial stability of its subsidiary companies and the bottom line.

Eastern Coalfields Ltd. (ECL), Bharat Coking Coal Ltd. (BCCL), and Western Coalfields Ltd. (WCL) are three of its subsidiaries that may be particularly hard hit financially.

A number of projects were canceled because the company did not receive the requisite return on capital based on calculations based on current coal prices. “As a result, if prices rise, many of these projects may be approved, ensuring that future coal supply is consistent, according to market experts.

There are some regions, particularly in ECL, where high-quality coal is available. And if the price increase does not occur, that quality of coal may have to be imported since it cannot be extracted. This will lead to increased imports of higher-grade coal in the future. Furthermore, when a corporation goes into the red (makes losses), it causes demoralisation and has an impact on production.

Thus, a price increase is required to increase and stabilise output. MCL, NCL, and other companies can make a lot of money, but they can't move money from one company to another.

About the Company

Coal India Limited (CIL) is an Indian central public sector organisation owned by the Government of India's Ministry of Coal. Its headquarters are in Kolkata. It is the world's largest government-owned coal producer. With over 272,000 people, it is also India's eighth-largest employer.

The PSU accounts for around 82% of total coal production in India. It produced 554.14 million tonnes of raw coal in 2016-17, up from 494.24 million tonnes in the previous fiscal year, and earned revenues of 95,435 crores (USD 12 billion) from coal sales in the same year.

The Government of India bestowed Maharatna status on CIL in April 2011, making it one of seven such organisations. CIL is a PSU owned by the Central Government of India, which supervises its activities through the Ministry of Coal as of 14 October 2015. CIL's market value was 2.11 lakh crore (USD 26 billion) as of 14 October 2015, making it India's eighth most valuable corporation.

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CIL is ranked eighth among the top 20 companies responsible for one-third of all worldwide carbon emissions.

As per Procurement Resource, the country's largest coal miner, Coal India Ltd., anticipates feedstock costs to climb in order to maintain commercial momentum while addressing inflationary concerns. Coal India is working to achieve an agreement on the matter with its stakeholders.

While they did not specify the amount of increase required, indications are that Coal India will be satisfied with a 10% increase, similar to what it had in 2018. According to industry leaders, a price hike is required not only to maintain profitability but also to secure adequate supplies to meet the country's coal demand.