Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
State-run Coal India will bid for three blocks in critical minerals auctions conducted by the country’s mines ministry in February, chairman and managing director P M Prasad told analysts in a post-earnings conference call on Monday.
India launched the first part of its critical minerals auction – expected to raise an estimated 450 billion rupees ($5.42 billion) overall – in November last year in a bid to drive its clean energy push, drawing interest from the likes of Ola Electric and Shree Cement.
Separately, a senior Coal India official confirmed that the company will be bidding for lithium and nickel mines in the auctions that will be held on Feb. 26.
The world’s largest miner has also visited lithium mines in Australia and is in preliminary talks about operating them, Prasad added.
The Kolkata-based Coal India is optimistic about reaching its production target of 780 million metric tons in the current fiscal year, Prasad said, but added that land- and environment clearance-related challenges at its South Eastern Coalfields unit could bring a shortfall of 8-9 million tonnes.
Coal India’s stockpiles and inventories held by power plants are currently at record highs, resulting in the miner lowering its annual production target for fiscal 2025 by 1.4% to 838 million tonnes.
The record-high inventory took a toll on the company’s e-auction premiums, which fell in the range of 36%-50% for January and February, according to Prasad, lower than the annual average of 80%.
Coal India earns a premium from e-auctions, or spot auctions, held over and above its supply obligations when demand outstrips supply.
This also dragged the miner’s revenue growth for the October-December quarter to nearly 3%, its slowest topline growth in eleven quarters, barring the April-June period in 2023.
Indications of sufficient availability of coal led shares to end 4% lower on Monday. The stock has surged more than twofold in the last 52 weeks ending Friday. Prasad said he expects global coal prices to stabilise at current levels over the next 1-2 years.
Prasad further added that Coal India, one of the largest employers in the country, expects employee costs to continue declining with costs falling an estimated 20 billion rupees in fiscal 2024 due to attrition.
($1 = 82.9980 Indian rupees)
(By Hritam Mukherjee and Sudarshan Varadhan; Editing by Janane Venkatraman)
Comments