Coal India shares fall 3.87 per cent over fears of failure to meet production target

The markets are also worried over the falling e-auction premium in January and February. The production target of 780 million tonnes (mt) may fall short by 10mt

Calcutta, February 20, dmanewsdesk: The shares of Coal India fell 3.87 per cent on Monday on the Bombay Stock Exchange to Rs 461.30 over fears its production may fall short of target this fiscal.

The markets are also worried over the falling e-auction premium in January and February. The production target of 780 million tonnes (mt) may fall short by 10mt.

The production target for 2024-25 has also been revised to 838mt from the earlier estimate of 850mt amid growing inventory at pitheads and power plants. A review of the target for the next fiscal is expected in the first week of April.

Coal India chairman P.M. Prasad told analysts at its earnings call on Monday the company continues on a growth trajectory, with five subsidiaries ahead of the their production targets for 2023-24 and there are still a few days left to step up production.

“There are another 39 days to go. 780mt is our target. Five companies are already ahead of the target. But there is one company — SECL — around 8-9mt we are little bit lagging behind,” he said adding Coal India is looking to minimise the gap.

The e-auction premium, which moderated in the second quarter of the fiscal to
83 per cent, moved in tandem with the international coal prices, leading to an improved premium of 117 per cent in
the third quarter.

Coal India had offered 16mt through the e-auction route in the third quarter at an average realisation of around Rs 3,321 per tonne.

The e-auction premium is measured in comparison to realisation from coal sales through fuel supply agreements.

In the fourth quarter, the premium so far is in the range of 36-48 per cent, while for the full year the average is around 80 per cent.

Critical minerals

Coal India is planning to participate in the auction of critical mineral blocks. The move is aimed at diversifying the business of the country’s largest public sector miner.

“The Ministry of Mines is conducting an e-auction for critical minerals. We are participating in three blocks,” Prasad said.

The due date for technical bids for the 20 blocks of critical minerals is February 26. The critical minerals include potash, nickel, chromium, platinum, copper, graphite, manganese, molybdenum, phosphorite, along with lithium, titanium, bauxite and rare earth elements.

“The Exploration Licence granted through auction shall permit the licensee to undertake reconnaissance and prospecting operations for critical and deep-seated minerals mentioned in the newly inserted Seventh Schedule to the MMDR Act,” a ministry statement said.

“This will bring several key benefits including bolstering domestic production, reducing import dependency, promoting sustainable resource management, attracting investments in the mining sector and developing key industries crucial for India’s industrial advancement,” the statement said.

Source: The Telegraph online