By Ajoy K Das

November 8, 2018 - Production growth green shoots are emerging among Indian State-run coal mining companies, but it is unlikely that demand from thermal power plants will be met.

Singareni Collieries Company Limited (SCCL), which has mining operations in the southern parts of the country, produced 5.27-million tons in October 2018, registering growth of 31% over the corresponding month of previous year.

SCCL was able to dispatch an estimated 5.89-million tons during October 2018, up from 5.10-million tons a year earlier.

The company produced 33.77-million tons in the April to October period, up from 31.8-million tons during corresponding period of the previous financial year, with officials maintaining that the miner is well on the path of achieving its production target of 68-million tons during 2018/19, against 61-million tons produced in the previous financial year.

At the same time, Coal India Limited (CIL), the largest miner accounting for more than 80% of domestic supplies of the dry fuel, reported production of 49.8-million tons during October 2018, up 7% over the corresponding month of the previous year.

CIL dispatched 50-million tons last month, up 3.5% year-on-year.

While there are still uncertainties whether the State miners will be able to bloom the green shoots, industry is wary that even if the revival in production growth is to gain momentum, it will not be able to match the pace of rising fuel demand from thermal power plants, and imports are thus here to stay.

As per government data, on November 1, coal stocks at 27 thermal power plants across the country was pegged at 10-million tons, or about six days consumption equivalent, and categorized at ‘critical’. This against the backdrop of power demand rising close to 11% during October.

The option of increasing coal dispatches to fuel starved thermal power plants leveraging pithead stocks of CIL is also fast fading, as such pithead stocks are now down to 18-million tons, from about 50-million tons early in the year, with officials maintaining that inventories could salvage the shortage situation for only a limited period, unless matched by a  rapid ramp-up of production levels through the year.

The officials point out that production growth is not matching rising power demand, evident from the fact that Indian thermal coal imports, at 125-million tons during January to September 2018, have been the highest in three-and-half years. Given the trend, the forecast for thermal coal imports during 2018 has been increased from 158-million tons early in the year to 164-million tons now.