Coal production increased in ‘big way’ during FY22-FY23; supply improved: Icra
India’s coal production witnessed significant growth during financial year 2022 and financial year 2023, resulting in improved availability and supply of the dry fuel, according to a statement by Icra. The ratings agency reported that the production of Coal India increased by 12.1 percent in financial year 2023, marking the fastest growth rate achieved by the state-owned miner in recent decades. In addition to boosting output and supply, the government implemented various reforms to enhance transparency, facilitate ease of doing business, and make the domestic coal and mining sectors more attractive for investment. Jayanta Roy, Senior Vice President & Group Head – Corporate Ratings at Icra, emphasized the government’s initiatives since January 2015, highlighting the impact of policy interventions in captive and commercial coal mining which have improved transparency and ease of doing business in the coal sector.
“The production of domestic coal witnessed substantial growth in financial years 2021-22 and 2022-23, growing by 8.7 percent and 14.8 percent respectively to keep up with the sharp increase in domestic coal demand. The growth rates of coal production in these financial years corresponded to demand increases of 13.4 percent and 8.5 percent respectively,” Roy stated.
Roy attributed this growth to a significant rise in captive and merchant coal mining, leveraging initiatives undertaken by the coal ministry. He further explained that “the transition to the auction regime in January 2015, and the opening up of commercial coal mining in June 2020, have contributed to the production of coal from captive and merchant miners.”
In 2020, Prime Minister Narendra Modi launched auctions for commercial coal mining to enhance coal availability in the country. According to data from the coal ministry, 86 coal mines have been auctioned for commercial coal mining, which have the potential to generate an annual revenue of Rs 34,188 crore for various states in the country. The production from captive and commercial coal mines has steadily increased over the years, recording a remarkable growth rate of 216 percent in the past six years.
The production from captive and merchant miners grew by an impressive 43.2 percent in financial year 2023, surpassing the 100 million tonnes annual production milestone for the first time. It increased from 86 million tonnes in financial year 2022 to 123 million tonnes in financial year 2023.
To strengthen India’s self-reliance in coking coal, the coal minister launched the Mission Coking Coal in August 2021, aiming to more than double the country’s coking coal production to 140 million tonnes by financial year 2029-30. An expert stated that this initiative has the potential to reduce the steel sector’s dependence on coking coal imports from the current level of 85-90 percent to 75 percent.
Official data reveals that India’s coal production has witnessed significant growth of 22.5 percent over the past four years, with production reaching 893 million tonnes compared to 729 million tonnes in financial year 2018-19. Additionally, the supply or offtake of coal has also shown improvement during this period, reaching 878 million tonnes in financial year 2023 compared to 733 million tonnes earlier.
Coal minister Pralhad Joshi recently assured at an event that the country will not face any shortage of coal this year.
In the April-June quarter of financial year 2024, domestic coal production increased by 8.18 percent, reaching a record figure of 222.6 million tonnes, and domestic coal offtake grew by 6.8 percent to reach a peak of 240.1 million tonnes.