Miniratna Bharat Coking Coal, the largest miner of coking coal and a subsidiary of national miner Coal India, whose IPO was fully subscribed within hours of opening on January 9, thanks to the reasonable pricing for the Rs1,071 crore issue. This is the first of the eight subsidiaries that will hit the market this year and the rest by 2030 as the government seeks to monetise large coal assets. In an interview, the company’s chairman and MD Manoj Kumar Agarwal tells Benn Kochuveedan that Bharat Coking with the commissioning of its largest Block E located in the Jharia coalfields in the Dhanbad district of Jharkhand, their annual output will go up by 15 million tonne. Exdited Excerpts:
Apart from being the largest miner of coking coal with nearly 60% of the market share, what makes Bharat Coking Coal a unique company for an investor...
This listing is aimed at discovering our real value. It’s better for us as a company and for parent Coal India and now for the investor to understand the real value of what we produce, which is primarily coking coal. Though we will continue to remain a Coal India subsidiary post-issue, the fund from the IPO will be deployed to get into the rare earth metals and solar power sector. The government was looking to diversifying into these sectors as part of a strategic pivot to a sustainable energy provider and attain the goals of mineral self-reliance. Coal India has already secured the preferred bidder status for a few critical mineral blocks, including a graphite block in MP and an exploration licence for rare earth elements in Andhra in partnerships with state-owned Indian Rare Earths, to identify and develop rare earth and beach sand minerals. The focus is on minerals essential for clean energy like batteries, solar panels, and mining of lithium, cobalt, nickel, and graphite, in addition to rare earths.
How do you look at the pricing and margins given supply constraints due to excess monsoons in earlier this fiscal? What is the demand outlook?
Yes, last year our mines had the heaviest rainfalls in the past 50 years—from an average of 1,700 mm annually to over 2,200 mm, leading to a steep fall in output. Another reason was the decline in e-auctions. We don’t have much control over pricing as domestic coal and coking coal prices are benchmarked to international prices, primarily Australian prices. For domestic sales to the power and cement sectors, it is at the notified price. So, effectively we have no control on prices.
What is your capital expenditure plan?
Each year, we need `1,000 crore of capex, and this remains more or less the same for considerable future.
What is the production target by 2030 and what’s your total identified reserves now?
We’re commissioning the first phase of our E block next fiscal and on full opening our annual output will jump by 15 MT, taking total to 54-55 MT. And this will be our largest expansion ever. This block has over 300 mt in reserves. Our total reserves are a little over 7.9 billion tonne, and we can keep on mining for at least 100 years.
With the monsoons over, do you think production will match the last year’s level by March?
Yes, production has already improved and we’re confident of delivering more than we’d done last fiscal when it was 40.5 MT.
Who are your largest consumers, moving towards electric blast furnaces, how do you look at your future demand?
I don’t think there will be any reduction in demand from blast furnaces fired by coking coal in any foreseeable future. Because to have electric furnaces, we need to use more scrap steel in steel making but we don’t have enough scrap metals and so our coking coal-fired blast furnaces will continue to be the main steelmaking method.