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Does the Falling Price of Imported Coal Will Effect Coal Mining in India?

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State-run miner Coal India will weed out anomalies in its pricing system and tweak it to reflect the true heat content of the coal it sells, coal and power minister Piyush Goyal has said. 

Source: ET

SNP Insight

The higher expenses result in falling net profit of CIL. It may increase future financial risk of the PSU which has big investment plan for future expansion. With falling price of imported coal add on more worries to the largest domestic supplier. The reduce price of imported coal which has equivalent heat rate of high grade coal supplied by CIL is comparatively cheaper. So this may can result in increase in import of coal by the costal based power plants. Also the states with large port facility will depend on imported coal for fuel mixing and also to fulfill their short term requirement in coal based power plants. This may reduce the demand for domestic coal and can be directly impact the production of CIL in future. So, CIL has to take measures to reduce its expenses. So that the domestic coal price will be competitive with imported coal.

Source: SNP Infra Research