Imported coal may feature on proposed coal exchange for trading, says CIL

Coal India wants imported coal to be traded on the proposed coal exchange to improve price discovery and transparency while supplementing existing auction platforms

Imported coal should be allowed for trading via the proposed coal exchange, expanding the platform’s scope beyond domestic supply and potentially improving price discovery for power plants reliant on overseas fuel, state-owned Coal India Ltd (CIL) has said.

 

“Coal sourced from overseas could also be traded through coal trade exchange hubs at suitable ports. This would allow pricing for imported coal-based power plants to be discovered and minimise chances of manipulation,” the company told Business Standard.

 

The miner’s participation on the exchange would be in addition to its existing sales channels. “Participation in the coal exchange platform will be in addition to CIL’s existing modes and methodology of offtake. One more avenue will be made available to the company. Per se, no additional operational changes are required,” it said.

 

The Coal Ministry recently invited public comments on draft coal exchange rules as part of sectoral reforms following the Mines and Minerals (Development and Regulation) Act, 2025, enacted by Parliament.

 

The proposed exchange promises to change the way coal is currently sold in India. At present, auctions are conducted through supplier-specific platforms such as MSTC and M-Junction.

 

Experts believe a centralised coal exchange would replace these siloed systems, allowing multiple producers and consumers to transact directly. The new system could strengthen transparency and competition in the coal market, despite challenges.

 

“One of the key hurdles would be the existing long-term contracts between buyers and suppliers and the obligation of both parties to maintain minimum sale or purchase volumes,” said Rajib Maitra, partner, accounting and consultancy firm Deloitte.

 

He added that the dispatch of surplus coal from captive mines in the open market, while relying on coal sourced at potentially lower prices via the platforms, would be one of the conundrums that would have to be addressed.

 

Maitra also cautioned that the emergence of traders and potential collusion to bid at high prices and redistribute coal could emerge as a risk. Another key issue would be the integration of the National Coal Index on the trading platform.