Coal India sets internal goal to double output target

Coal India Ltd can deliver on its promise of doubling production growth this year — with a little help from railway minister Mamata Banerjee.

The near-monopoly state-run coal miner has set an internal target of 11% growth in coal production in 2011-12 over the actual production in 2010-11 as against the 5% growth mentioned in its performance memorandum signed with the coal ministry in March, chairman N C Jha said on Wednesday.

“We have set an internal target of achieving 477 million tonne of coal, while we have signed the MoU mentioning 452 million tonne for this year against 2010-11’s actual production of 430 million tonne,” he said on the sidelines of an event organised by the Indian Chamber of Commerce.

“But this target would be reached only if the Railways gives an average of 190 rakes a day for the whole of the year,” Jha said, adding that growing stocks of coal at the mines (70 million tonne at last count) due to shortage of rakes is one reason production is not growing.

“I am burdened with a huge stock. We were of the view that if rakes supply in April didn’t increase from March level, we had little option but to cut back our production,” said Jha.

“Luckily, supplies have improved,” he said. “This month has been very good from the off-take point of view, which has grown 9.5%. This has been possible because of increase in availability of rakes. As against an average supply of about 158 rakes a day in April last year, the Railways are now supplying us with 180 rakes a day. If this continues, hopefully I would be able to liquidate some stocks.”

The performance target for 2011-12 is based on expectation of an almost 20% increase in average rake availability to 185 rakes a day against 155 rakes a day in 2010-11.

Coal India, meanwhile, has decided in a board meet held on Monday to issue request for proposals to 16 companies across the world for price and quantity quotes for supplying coal from overseas mines.

Jha revealed that there is a huge gap of 450 million tonne (almost equal to a year’s production) between the quantity that Coal India has promised to supply over the next 10 years to its domestic customers and what it can produce from its present and future mines. And this gap has to be met mostly from imports.

“To meet this gap, we have to either acquire coal mines in other countries, which is a time-consuming affair, or secure supplies from other countries, which we are doing now,” Jha said.

Bagging the Maharatna’ status, which allows its board to invest
up to Rs1,000 crore for overseas acquisitions and joint ventures without government permission against a limit of Rs5,000 crore earlier, would expedite processes to buy foreign mines, the chairman said, without divulging whether any such deal is in the offing.