Despite solar push, India's coal production hits a new milestone of 382 MT

India’s coal production for the first half of this financial year reached a new milestone of 382 million tonnes (MT), according to CareEdge Research. The research firm said the number is in line with its earlier estimate that output may cross 350 MT during the first half of this financial year.

Domestic coal production has crossed 380 MT during H1FY23 (April–September), registering around 21 per cent growth over the same period in financial year 2021, on account of a low base, CareEdge Ratings said in a report.

Despite the Centre and states trying to increase the solar power capacity, Coal India remains the largest contributor in terms of production. This growth was supported by various government initiatives to maintain the coal demand and supply in the country and by the contribution of the new commercial mines that became operational in the first quarter of this financial year.

“This increased production by captives has helped in meeting the demand-supply gap in the domestic market. The contribution of captives in total domestic coal production during H1FY23 has increased to around 14 per cent from an earlier 11 per cent during H1FY22,” the report said.

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Moreover, coal remains the main source for power supply in India. The coal despatch to the power sector, which accounts for the largest coal despatch has increased by around 17 per cent y-o-y. As of August 2022, the energy deficit in the country has come down to 0.4 per cent (465 million units) as against 0.5 per cent (638 million units) in August 2021. While coal production has increased, electricity requirement has declined owing to good monsoon during the months of June-August.

CareEdge Research estimates the coal production to continue to rise and reach around 500 MT in the second half of this financial year.

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“Coal prices of South African thermal coal, a global benchmark, have been on an upward trajectory since November 2021 and the geopolitical tensions between Russia and Ukraine have caused significant price fluctuations since the beginning of FY23,” the report said.

“As of July 2022, the global benchmark had crossed its all-time high price of around USD 300 per tonne in April 2022 and had reached USD 329 per tonne in July 2022, before settling at USD 321 per tonne in September 2022. International coal prices are expected to remain elevated owing to the heightened geopolitical tensions,” it added.