Coal India Considering Raising Met Coal prices, Official Says
31 July 2017
The world’s biggest coal miner is considering raising metallurgical coal prices for the second time this year, a company official said, reflecting Coal India Ltd.’s efforts to shore up revenue amid rising costs.
Coking coal producing units Bharat Coking Coal Ltd. and Central Coalfields Ltd. plan to submit the proposal to their boards in a month, the official said, asking not be identified, citing internal policy. The proposal follows a jump in Australian benchmark prices, he said. Australian hard coking coal averaged $192 per ton in the three months ended June, gaining 14 percent from the preceding quarter.
Higher coking coal prices may only partially offset a planned increase in employee costs as the steel-plant fuel accounted for barely a tenth of Coal India’s production, with thermal coal comprising the rest. The Kolkata-based miner is in talks with labor unions on wage hikes and has started making provisions for a retroactive salary increase that have pushed its profits down in the past four quarters.
“Coal India’s profitability is under pressure and in this situation every opportunity of a price increase is good for its earnings,” Goutam Chakraborty, a Mumbai-based analyst at Emkay Global Financial Services Ltd. said. “But coking coal alone would be too small to offset the cost burden.”
The bulk of the state-run company’s thermal coal output is used by power plants and it is under pressure to keep thermal coal prices low to aid the government’s reforms to turn around ailing power retailers.
Coal India’s units will review coking coal prices every quarter to reflect changes in Australian benchmark prices in the preceding quarter, the company official said. The two units had raised prices of the steel plant fuel in January, projecting a combined revenue gain of 32 billion rupees in the year to March 31.