KOLKATA (miningweekly.com) - Production growth from captive coal mines in India was failing to keep pace with demand, tempering optimism over the easing of supply side concerns, with major producer Coal India Limited (CIL) alone realising success in overcoming shortages.

According to data sourced from the Coal Ministry, CIL, accounting for 80% of domestic supplies, recorded a 9% growth in production between April and November 2015, up from 6.8% during corresponding previous period.

However, production from captive mines was failing to keep pace despite the Indian government’s focused policy initiative to ramp up production after completing the auction of 34 operational or nearly operational coal blocks in 2015.

Production data of captive coal mines showed that production growth was on a decline at 4.5% between April and November 2015, after recording a growth of 7.8% during the corresponding period of the previous year.

The 34 coal blocks redistributed to new investors through the several rounds of auction had an aggregate production capacity of 50-million tonnes a year, but with most of these blocks already operational, production was achieved by private miners in the case of just eight blocks.

Production from these eight blocks during the period was only 18-million tonnes, down 47% from the corresponding period of 2014.

According to a senior Coal Ministry official, one of the primary reasons for new the miners' inability to get production restarted in the auctioned blocks was tardy performance by provincial governments in completing the process of transferring land ownership to the new mining companies, as well as delays in getting new mining plans approved by relevant federal authorities.

But sources in the power generation industry maintained that the increased availability of coal and limited impact of lower production by captive coal mines was deceptive, as demand for the fuel was subdued in reaction to subdued demand for electricity from industry.

It was pointed out that although coal inventories at thermal power plants across the country had increased to 21 days' consumption equivalent during 2015, up from eight days' consumption equivalent, the plant load factor of thermal power plants was down to an average of 60%, down from 75%, indicating a fall in industry’s energy demand and a resultant slowdown in coal offtake from both captive and CIL mines.

But despite the slowdown in production from captive coal blocks not having an immediate impact on supplies, the Coal Ministry had convened a “review meeting” on January 19, on the performance of 31 of the coal blocks auctioned last year.

The performance review would include coal blocks secured for captive consumption by such companies as Steel Authority of India Limited, Adani Power, Hindalco Industries, NTPC Limited and JSW Limited.

As per the notice issued, the review meeting would be chaired by the Joint Secretary of the Nominated Authority under the Coal Ministry for auction of coal assets and would inter alia include the review and scrutiny of all issues relating to the failure to get the blocks back into production, the official added.