Coal India Ltd., the world’s biggest miner of the fuel, reported the lowest production in three years after heavy rains flooded its mines.
Production in August dropped 10.4 percent from a year ago to 32.4 million metric tons, the company said Thursday in a stock exchange filing. That was the lowest since the same month in 2013. Shipments declined 9.6 percent to 36.72 million tons, the least since September 2014. Rains and local protests cut output by 2.4 million tons, N. Kumar, technical director at the miner, said Wednesday.
Coal India may face further disruptions as labor unions go on a one-day strike on Friday, demanding more jobs and higher wages.
The Kolkata-based miner’s plans to double annual output in four years have been undermined by inadequate demand from power utilities, which account for almost 80 percent of its shipments. A government plan to revive power distributors may boost generation and push demand for the fuel that fires almost two thirds of the nation’s generation capacity.
“The drop in production and offtake is a near-term negative for Coal India, but it’s still not a dire situation,” said Abhisar Jain, a Mumbai-based analyst at Centrum Broking Pvt. “Power plants continue to use their own coal inventory, which may have affected Coal India’s production and dispatches, coupled with strong monsoons. We expect things to improve in a month or so, as plants go for restocking of coal and monsoons subside.”
Coal stocks at power plants monitored by India’s Central Electricity Authority earlier this week dropped to the lowest level since December 2015. Plants had stocks of 28.3 million tons as of Aug. 30, enough for an average 21 days.
Coal India’s production in the five months ended August 31 rose 1.3 percent, while shipments increased 0.2 percent. The company plans to raise output almost 12 percent to 598.6 million tons in the year to March 31.
Coal India’s shares declined 1.7 percent to 332.30 rupees at the close in Mumbai. The benchmark S&P BSE Sensex rose 0.4 percent.
In Conversation With Mr Ajay Reshamwala, Managing Director, Reshamwala Shipbrokers
India Tanker Shipping Trade Summit 2018