New Delhi: Eastern Coalfields Limited (ECL), a subsidiary of Coal India Limited, is confident of achieving its coal production target of 58 million tonnes in the current financial year and returning to profitability, despite weather-related disruptions and high legacy costs, Chairman and Managing Director Satish Jha has said.
Weather Disruptions Impact Production
ECL’s production was severely affected during the monsoon months due to prolonged rainfall. According to Jha, rainfall between June 15 and August 27 occurred almost daily, significantly hampering mining operations.
“Not just the intensity, but the number of rainy days had a major impact on production,” Jha said, explaining that output growth slipped from a positive 2 percent in mid-June to a negative 5.2 percent by the end of August. Although the company managed to recover most of the losses by September and October, cyclonic weather again disrupted operations.
He expressed confidence that production would return to positive growth from November, provided weather conditions remain favorable.
Production Targets and Profitability Outlook
ECL produced around 52 million tonnes of coal in the previous financial year and is targeting an additional 6 million tonnes this year. Jha said the company needs to maintain a minimum output of 4 million tonnes per month to remain financially viable.
“If we achieve the 58-million-tonne target, we will certainly return to profit and perform better than last year, though gains may not be proportionate due to subdued market conditions,” he noted.
Buyer-Driven Coal Market Pressures Margins
Highlighting market challenges, Jha said the coal sector has become buyer-driven, with customers demanding better quality coal at lower prices.
“Higher production does not automatically translate into higher profits. Profitability will depend largely on demand and pricing conditions,” he said.
High Legacy Costs Remain a Key Challenge
ECL’s profitability is constrained by high fixed costs stemming from its legacy underground operations in the Raniganj coalfield, one of the oldest coal-producing regions in the world.
Nearly 67 percent of ECL’s production cost goes toward salaries and wages, significantly higher than Coal India’s average of 48 percent and far above newer subsidiaries, where wage costs range between 20 and 25 percent.
“These costs are incurred whether the mines operate or not,” Jha said.
Six Loss-Making Underground Mines Identified for Closure
To address structural losses, ECL has identified six underground mines for closure or manpower redeployment during the current financial year.
“If losses exceed salary and wage costs, we will redeploy manpower and take a call on shutting operations,” Jha said, adding that internal consultations are underway and decisions will be implemented within the fiscal year.
ECL currently operates 80 mines, including 48 underground, 23 open-cast, and nine mixed mines.
Focus on Improving Coal Quality and Realisation
The company is also working to improve coal quality at major sidings such as Salanpur, Mugma, and Chitra. Salanpur is now fully compliant with quality standards, while Mugma has achieved 80–90 percent compliance.
Quality challenges at Chitra persist due to steeply dipping coal seams that cause coal and overburden mixing. However, improved mining practices used at Salanpur are being replicated at other sites to address these issues.
Evacuation and Sales Challenges at Rajmahal
Jha highlighted evacuation and sales constraints at Rajmahal, where ECL holds its largest coal stock. Supplies from this region are mainly linked to NTPC’s Kahalgaon and Farakka power plants, which currently have a lower merit order compared to other NTPC units.
Discussions are underway with NTPC to align pricing and operational efficiency. “If we adjust prices and improve efficiency, both ECL and the power generators can benefit,” Jha said.
About Eastern Coalfields Limited (ECL)
Eastern Coalfields Limited is a subsidiary of Coal India Limited and operates primarily in the Raniganj coalfield across West Bengal and Jharkhand. Established in one of the world’s oldest coal mining regions, ECL produces both underground and open-cast coal and plays a key role in supplying fuel to power plants, steel units, and other core industries in eastern India.
