Coal India production slump likely to continue for another month

India’s state-owned and largest coal miner Coal India Ltd (CIL) expects the ongoing historic slump in production caused by heavy rains and land issues at its mines to continue for another month. The company’s production is down 6 per cent in the current financial year so far, the first such drop for the comparable period (April-July) in the past five years. 

CIL alone meets 80 per cent of India’s domestic coal demand across key industries including power, cement, and steel. 

“With the rains relenting in August, the production tempo is picking up. If this continues, hopefully by September end, CIL expects to erase the negative trend and consolidate the positive growth,” a senior company official told Business Standard. 

The company produced 229.8 million tonnes (mt) coal during April-July 2025 against the 244.3 mt during the same period last year, recording a decline of 5.9 per cent. The miner said it produced an average of 1.9 mt of coal per day in June 2025, compared with 2.1 mt in June 2024, as an early and unusually intense monsoon disrupted operations across its mining regions. 

“The intensity of rainfall across all the mining areas was significantly higher in the first quarter of this financial year on a year-on-year (Y-o-Y) comparison. Land issues also added to the production woes,” the official said. Opencast mines account for around 95 per cent of CIL’s output, leaving it highly exposed to weather disruptions. 

“Primarily, the pre-monsoonal inclement weather was the cause for hindering coal output. However, there is no shortage of coal, and with enough sufficiency, the company is confident of meeting the rising demand,” the official said. 

The coal ministry has set a production target of 1.15 billion tonnes for FY26, compared to about 1.048 billion tonne produced last year, implying a 10 per cent growth target. However, as of July-end in 2025–26, production trends show a decline of 6 per cent for major public producers, 3.6 per cent for state-level producers, while output from captive and other private operators has increased 10 per cent. 

“Overall, coal production has declined by 3 per cent Y-o-Y during the April to July period. Therefore, the overall demand and supply of coal this year has been lower than anticipated and even lower than last year (April to July period). This has weighed on prices too, with the National Coal Index for non-coking G7-G14 grade coal dropping from 135.87 in June 2024 to 129.58 in June 2025,” said Rajib Maitra, Partner at Deloitte.

 

He also said constraints facing miners this year are lower dispatches owing to a heavier-than-expected monsoon, significant competition from captive and commercial blocks alongside weakening global coal prices, and delays in operationalising new coal blocks. 

He pointed out that coal’s share in electricity generation fell to its lowest in five years in July 2025, pithead stock levels rose 26% year-on-year, leading to logistics and operational challenges, and lower e-auction premiums have eroded profitability.