Production by Coal India (CIL) declined 1.9% annually to 517.8 million tonne (MT) in the first 11 months of FY20, mainly due to excessive rainfall hampering mining operations during the monsoon earlier this financial year. Law and order issues in some major mines, and several employee union strikes following the Union Cabinet’s February 2019 decision to ease mining norms for private companies also hampered the world’s largest miner’s output. The drop in CIL production in the fiscal year would have been much lower had it not recorded a 14.2% annual rise in its February output. The coal production scenario has improved, at least, from the November 2019 levels when CIL output was lower by 7.8% year-on-year (y-o-y).
Production in its high capacity mines under South Eastern Coalfields and Mahanadi Coalfields increased 19.2% and 11.9% y-o-y, respectively, in February. The coal behemoth’s smaller subsidiaries — Central Coalfields and Western Coalfields — recorded annual increases of 20% and 26.7%, respectively. ICICI Securities expects CIL to produce 600 MT in FY20, lower than the 603 MT mined by the company in FY19. “Average production for February 2020 is already at about 2.3MT/day,” ICICI Securities noted. “With CIL having clocked an average production of 2.55 MT/day in March 2019 (which will be sufficient for achieving our estimates), we may even be positively surprised on the production numbers for the year,” it added.
