According to ICRA’s analysis, the opening up of the coal sector for private commercial mining , for which the first list of mines have been published by the Central Government on June 18, 2020, is an important reform in ensuring India’s energy security. However, its rollout has been at a time when economic outlook remains uncertain amid the Covid-19 pandemic, leading to weak investor sentiment.
As per ICRA’s latest report on the coal mining sector, the domestic coal demand is estimated to increase at a modest compounded annual growth rate (CAGR) of 2.9 per cent between FY2021 and FY2027. This is much lower than the CAGR of 5.2 per cent registered between FY2013 and FY2020. Given Coal India Limited’s ambitious target to reach 1 billion tonne coal production by FY2024, private commercial miners would face stiff competition in gaining a foothold in the domestic market.