India’s coal supply glut forces top miner to explore exports

Coal India Ltd. has allowed consumers in neighboring countries like Nepal and Bangladesh to participate in its auctions, the miner’s first strategic push for exports as it looks to ease a deepening glut at home.

The decision came into effect Jan. 1, the state-owned firm said in an emailed statement. Its shares extended gains to as much as 7% in Mumbai following the news, the biggest intraday rise since June 2024. 

Coal India has been sitting on bloated inventories of unsold fuel after a milder-than-expected summer subdued demand for electricity last year. It has also seen its sales squeezed by intensifying competition from rival miners as well as growing output from renewables.

Stockpiles at Coal India’s mines rose to a record last year, and have remained close to that level, weighing on the company’s performance. Inventories at power stations, the nation’s biggest coal users, rose 17% last year, enough to last an average 18 days, government data show. 

The firm’s latest effort to offload supplies follows the government’s decision last month to allow companies to export half the coal they buy from miners through a new auction system.

Exports can help offset some of the losses that Coal India is making in the local market, according to Rupesh Sankhe, senior vice president for research at Elara Capital India Pvt. 

“Based on calorific value, Coal India’s coal will be cheaper than supplies from other nations, such as Indonesia or Australia. That could be a draw for some overseas consumers,” Sankhe said. 

High ash content can make Indian coal less competitive in international markets and Coal India’s shipments have faced scrutiny over quality. 

“This can work only if Coal India offers the quality that can compete with other seaborne supplies available,” Sankhe said.

Coal India’s production during the nine months through December declined 2.6% from a year earlier, while shipments dropped 2.2%, according to the latest data released by the company.

(By Rajesh Kumar Singh)