Coal news and updates

The trade unions of Coal India Ltd have not decided whether they will go on strike this month as the chairman of the world’s largest coal miner said four new fields will be offered for contract mining by the end of this month.

“We (all five unions) are trying to meet before 17 December to take a collective stand,” said S.Q. Zama, secretary general of Indian National Mineworkers’ Federation, when asked if his union will take part in a 17-19 December strike called by another trade union Centre of Indian Trade Unions (CITU).

A three-day strike threatens to badly hurt Coal India, which is already scrambling to get close to its 482 million tonne (mt) production target for the year to March, but if an outsourcing policy of the company gathers steam, it has the potential to diminish the influence of the powerful unions in the long run.“Three request for quotations (from private miners) have already been published. Four more will come for tendering process before the end of this month,” chairman S. Narsing Rao said. When asked if more fields will be given to private parties in the future, he said, “We will see the results of these projects first.”

Earlier, CITU gave a strike notice for 17-19 December, but the other unions did not follow suit and Rao said talks are on to avert the strike.

Coal India, which produced 465.18 mt coal from its 462 mines, has about 337,584 workers, but their numbers are declining owing to increased mechanization and outsourcing.

“Incrementally, outsourcing will be positive for the company,” said Giriraj Daga, an analyst at brokerage Nirmal Bang Equities Pvt. Ltd. “But results won’t be immediate.”

Private miners will help Coal India to speed up its mining and save costs, and it is little wonder then, that this concept is trickling in, said one industry executive who earlier worked for the miner.

“There is the concept of mine-developer-cum-operator (MDO), there is public-private partnership (PPP), there is coal block auctioning…all of these are coming up to cover up the inefficiency at Coal India,” the industry executive said, not wanting to be named. “The contract miners can produce a lot more coal, with smaller equipment and in less time.”

The executive said while Coal India spends Rs.100-150 to remove one cubic metre of overburden (top soil that covers the coal), private miners can do it for Rs.50-60 per cubic metre.

As Coal India appoints MDOs, the government is working on the terms and conditions of the PPP plan and coal block auctions, coal secretary S.K. Srivastava said. “Meetings are going on to finalize the terms and conditions of the PPP,” Srivastava said.

The new trend is enabling more private miners to strengthen their business. Aditya Birla group’s Essel Mining and Industries Ltd is the MDO for two of Coal India’s mines—the Bhubaneshwari mine in Odisha, which is a year old, and Rajmahal in Jharkhand, which has just started to operate. These operations are fee-based, where the MDO gets a fixed amount for every tonne of the coal extracted.

Rao said the four new blocks coming up for tendering are small with a potential to produce 2 mt of coal a year.

The Adani group also has a mining arm and is eyeing MDO assignments, according to industry sources.

The five unions of Coal India want the outsourcing policy revoked.

“Stop outsourcing and deployment of contractor/outsource workers/agency workers to substitute permanent/regular jobs,” one of the items on their list of 15 demands reads. However, the centre point of their fight with the company remains the government’s bid to disinvest and restructure the company.

To be sure, the five unions continue to hold sway over the company—earlier this year they made the government cut to half its plan to sell 10% of its stake in the market.

Shares of Coal India gained 0.28% to Rs.290.40 on Monday on BSE, while the benchmark index, Sensex, gained 1.57% to 21,326.42 points. In the past 12 months, Coal India lost 20.04% while the Sensex gained 9.79%.

 

 

Source: http://www.livemint.com/