CIL to offer superior grade coal for 5-6 years to non-core consumers

KOLKATA: Coal India Ltd (CIL), for the first time, has decided to offer superior grade coal extracted from underground mines on a five-six-year contract to non-core consumers offering the highest price through a tendering route. Coal offered through this mechanism will be lifted from underground mines that are otherwise unviable and are generally not required by the thermal power generators.

The process will involve a preliminary expression of interest to ascertain the genuineness of customers followed by a technical tendering process for selling coal on a five-six year term. This multi-year agreement will have an in-built price revision formula based on factors that affect mining costs.

Confirming the development, CIL chairman PS Bhattacharyya said: “CIL is currently working on the details of the procedure that needs to be adopted. Coal offered under this procedure will be a portion of the volume we intend to offer through e-auction. The new coal distribution policy has allowed us to offer 10% of the total production through e-auction and coal from underground mines will form a portion of this.”

This year CIL will be allowed to offer about 36 million tonnes of coal but may end up doing 15 million tonnes, as e-auction will be resumed in November. E-auction was discontinued after a court ruling and has recently been allowed.

“Coal mined from underground mines is generally of better grade and these are not normally required by the power sector as technology allows the electricity generators to absorb low grade, high ash content coal. Nevertheless, these mines are unviable at the present price that we are forced to offer. Hence, selling them through the tendering route will make such mining profitable,” he said.

Mr Bhattacharyya adds: “The first tender for long-term supply will be done in the next two-three months and we are working on the modalities.”Digressing to beneficiation of coal, Mr Bhattacharyya said: “The present pricing pattern of coal needs to change after we start offering washed coal.

Currently, conformity of grade quality for coal delivered from open cast mines varies between 80% and 120%. However, if coal is washed, the quality will be very close to the announced grade. It has also been found that if coal is transported beyond 400 km, washing becomes viable and a major quantity of it is transported beyond 600 km.”