Flooding at large Coal India mine to halt output for a month

Flooding at one of Coal India Ltd’s largest open-pit mines will halt production there for at least a month, a senior company official told Reuters last week, in a setback for a country trying to reduce its dependence on coal imports.

The flooding at the Dipka mine in Chhattisgarh, which produces more than 30 million tonnes a year of thermal coal and accounts for some 5 per cent of Coal India’s overall output, could leave some power plants in eastern and central India scrambling for fuel.

The mine supplies coal to multiple utilities including NTPC Ltd’s Sipat plant and state-run utilities in western Maharashtra state.  The outage also comes at an inopportune time as state-run Coal India is due to begin roadshows to woo investors ahead of a planned stake sale in the company. Some expensive mining equipment may also be damaged by being submerged by the flooding, it is feared.

Output from Coal India, the world’s largest miner by output, has been falling this year as heavy rains have hampered production at many mines in India’s east. Monsoon rains in India were 10 per cent above average in 2019 – the highest in 25 years – and seasonal rains have continued longer than expected.

The shortage of coal created by the flooding could force the energy hungry nation to boost coal imports this year, at a time when India has been looking to reduce coal shipments to cut its import bill, with coal featuring in the top five commodities imported by India by value.

Coal India said its output for the six months to the end of September fell 6 per cent, with September production dropping 23.5 per cent to the lowest level in months. It wants to produce 660 million tonnes during the year ending March 2020, up 8.7 per cent from the 606.9 million tonnes it produced in 2018/19. Coal accounts for about 75 per cent of India’s power generation, and India wants to arrest rising imports.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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