As the Indian economy is reviving from the Covid slowdown, India's coal production and consumption are touching new highs. Production reached 892 million tonnes (MT) during FY23, a growth of 14.7% over the previous fiscal of 778.2 MT. Further, to meet the energy demands of a high-growth economy, the Ministry of Coal has set a target of one billion tonnes of domestic coal production in FY24, a 13% growth over FY23.

Coal India Limited (CIL) continued to be the largest producer of domestic coal accounting for 78.8% of the total production during FY23, with 12.9% growth in output to 703.2 MT during this period. Singareni Collieries Company Limited (SCCL)'s production grew 3.3% from 65 MT in FY22 to 67.1 MT. Production from captive mines grew 35.1%, from 67.1 MT to 122.4 MT in FY23, says an analysis by CareEdge Research.

It says the targeted domestic production of one billion tonnes in FY24 will be driven by a ramp-up in production of state-owned CIL and NLC India Limited by engaging Mining Developers cum Operators (MDOs). Further, the incremental output is also expected from operational and new captive mines. The government’s recent reforms in the sector include the amendment of the Mines and Minerals Act, of 1957 which allows the captive mines to sell up to 50% of their annual coal production in the open market after meeting the end-use plant requirements, increase in the use of mass production technologies, expansion of existing projects and privatisation of coal blocks, 100% Foreign Direct Investments, Single Window Clearance etc. will continue to boost domestic coal production in the medium term.

India's domestic coal production was facing many issues in the past few years with court intervention causing the cancellation of allotted coal blocks and the inability of domestic coal producers to ramp up production. The Ministry of Coal has auctioned 87 coal mines to date under six tranches, with an estimated revenue generation of about ₹33,200 crore. About 106 fully explored, partially explored, coking, non-coking, lignite etc. coal mines are being offered under the 7th round of auctioning which commenced in March 2023.

Coal production from captive mines contributed 13.7% to total coal production during FY23, as against 11.6% during FY22. Four new captive mines were activated during FY23.

The power sector continued to be the largest consumer of domestic coal with 84%, as total despatches to the sector were 737.9 MT during FY23, an increase of 9.1% over the previous year's 676.3 MT. This increased supply to the power sector was majorly on account of the higher coal requirement from the sector due to increased demand for electricity on account of seasonal changes and warmer temperatures. Coal despatches to captive power plants grew by 8.1% in FY23 to 46.1 MT in FY23 from 42.7 MT in the previous year. However, despatches declined for other sectors like cement, steel, sponge iron, fertilizers, textiles, chemicals, paper & pulp, and other basic metals, as the power sector was prioritised during the year. Other sectors got only 93.4 MT during FY23, a fall of 6.9% from the previous year's 100.4 MT.

Plant Load Factor (PLF), which measures the efficiency of power plants, is also going up. The PLF of coal-based power plants improved to 64.15% in FY23 from 57.23% in FY22, primarily due to a ramp-up in domestic coal supply to meet the high demand for coal-based power plants. Rakes to transport coal for the power sector increased by 5.6% in the last fiscal, as the Ministry of Railways purchased one lakh wagons to increase the railway connectivity from coal mines areas to the power plants. The Ministry of Coal will be adding 19 First Mile Connectivity (FMC) Projects by FY26-27 to the existing 55 projects with an additional capacity to transport 330 MT of coal. These projects are being undertaken by the Ministry of Coal to develop the 'National Coal Logistics Plan' to strengthen rail networks from pitheads to dispatch points and overall rail networks for coalfields.

The analysis says overall energy requirement in the country has increased to 1,182 billion units (BU) during FY23 from 1,078 BU during FY22. The power sector consumed 663.5 MT of domestic coal and 50.8 MT of imported coal in FY23 (April 2022-February 2023), a y-o-y growth of 10% and 110.5%, respectively. Coal-based power generation accounted for more than 74% of total power generated in FY23, says the CareEdge data.

India's coal production

Domestic coal production up 14.7% to 892 MT in FY23; FY24 target is one billion MT