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Commercial Coal Mining May See Weak Investor Sentiment - ICRA

Coal News - Published on Wed, 01 Jul 2020

Image Source: Coal Auction
A report by credit ratings agency ICRA said that the prospects of commercial coal mining in India may be dimmer than initially expected because of the expected shift in India’s energy mix from fossil fuel-based power to renewable energy. The rollout of this government reform at a time when the economic outlook remains uncertain amid the Covid-19 pandemic may lead to weak investor sentiment. ICRA Senior Vice-President & Group Head, Corporate Sector Ratings Jayanta Roy said “In a market, where an overwhelming majority of the domestic supply is controlled by Coal India and Singareni Collieries, affordability, dependability and consistency in coal quality would remain critical drivers that would determine if the existing coal customers decide to partly shift their sourcing to private commercial coal miners. Experienced players, who have the knowhow of efficiently operating a coal mining business, stand a better chance in making a dent in the market share of the existing players. Over the long-term, we believe that coal consumers are likely to benefit from increased competition in the domestic coal mining industry."

The domestic coal demand is estimated to increase at a modest compounded annual growth rate (CAGR) of 2.9% between FY2021 and FY2027, ICRA estimated. This is much lower than the CAGR of 5.2% registered between FY2013 and FY2020. Given Coal India’s ambitious target to reach 1 billion tonne coal production by FY2024, private commercial miners would face stiff competition in gaining a foothold in the domestic market.

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Posted By : Yogender Pancholi on Wed, 01 Jul 2020
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