India’s CIL lowers coal output guidance

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State-controlled mining firm Coal India (CIL) has revised its output target for the 2020-21 fiscal year ending 31 March to 660mn t from an earlier projection of 710mn t, in response to reduced demand because of the impact of the country's Covid-19 outbreak.

CIL's output in August increased by 7.1pc from a year earlier to 37.17mn t, after production previously fell for four straight months. The amount of coal CIL supplied to consumers also increased last month, rising by 9.3pc to 44.34mn t, bringing to an end five months of consecutive falls.

April-August output reached 195.54mn t, down from 210mn t in the year earlier period. Sales during this period fell by 13.4pc to 208.4mn t. The falls in production and sales weighed on CIL's profitability in the April-June quarter, with the company's profit down by 55.1pc against the previous year to 20.78bn rupees ($282mn).

CIL's output has also been affected this year by historically high inventories, although its stocks fell to 62.71mn t as of 31 August from highs of over 78mn t in late May. This followed an aggressive sales push to customers in the power, cement and sponge iron industries through online auctions.

Several sponge iron and cement manufacturers have bought medium- to high-grade coal at CIL's electronic auctions in recent months. The firm has trimmed its base price in all its e-auctions since April to attract bidders, which otherwise would have bought imported coal.

But CIL is confident that it can produce and sell around 660mn t in 2020-21 despite the overall economic slowdown. The company has been ordered by the government to substitute coal imports to the tune of 100mn t in 2020-21 and it has been intensifying its import substitution drive.

By Ajay Modi

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