August 2023: CIL's Coal Production Surge Boosts Dispatches

In the face of monsoon challenges, India’s state-run mining giant, Coal India Limited (CIL), demonstrated outstanding performance in coal production during August 2023. This surge in production, a 13% year-on-year increase to 52.3 million tons (million tons), marks a significant milestone compared to 46.22 million tons in August 2022. Impressively, CIL has consistently exceeded 50 million tons of coal production each month in the first five months of FY24 (April-August 2023).

Key Highlights

• Yearly Comparison: CIL’s coal production saw remarkable growth, with August 2023 figures boasting a substantial 13% year-on-year increase compared to August 2022.
• FY24 Milestone: For the first five months of FY24, spanning from April 2023 to August 2023, CIL has maintained an impressive coal production rate, consistently surpassing 50 million tons.
• Dispatches In Overdrive: During August 2023, coal dispatches exhibited a robust uptick, recording a 15% year-on-year surge to reach 58.7 million tons. This surge in dispatches not only outpaced production growth but also mirrored the growth rate seen in June 2022.
• FY24 So Far: The cumulative data for the first five months of FY24 reveals a compelling story of growth. Coal dispatches during this period escalated by 8% year-on-year to 305.21 million tons, while coal production surged by 11% to reach 281.5 million tons.

Need For Increased Domestic Production

As coal-based power generation experiences a robust resurgence, CIL faces the imperative to bolster production. This is essential to maintain an adequate coal inventory at power stations, as depleting stockpiles pose a looming challenge.

According to the Central Electricity Authority, coal inventories at power plants have witnessed a sharp decline, plummeting to 30.34 million tons as of 30 August 30 2023, down from 35.16 million tons at the end of July. However, this inventory level still slightly exceeds the year-ago figures of 29.23 million tons.

Meeting Supply Commitments

In addition to replenishing dwindling power plant inventories, CIL must also fulfil its supply commitments, catering to both the power and non-power sectors. Recent initiatives include offering a substantial 6.55 million tons of coal for the power sector through auctions conducted under the SHAKTI scheme, scheduled for lifting between August 2023 to October 2023. Additionally, 3.619 million tons of coal have been allocated for sales to the ‘other’ sub-sector through the sixth tranche of linkage auctions for the non-power sector.

Market Outlook

In terms of production targets, CIL has been steadily aligning with its objectives in the initial five months of FY24. This promising trajectory indicates a proactive approach to meeting growing coal demands. Against a coal production figure of 703.22 million tons recorded in FY23, the company has set an ambitious target of reaching 780 million tons in FY24.

OFB’s Insight 

CIL’s remarkable performance in coal production, dispatches, and strategic initiatives highlights its pivotal role in India’s energy landscape. As it continues to evolve and adapt to changing demands, CIL remains a cornerstone of the nation’s energy infrastructure, ensuring a steady coal supply to power its growth.