New mine to help Singareni Collieries meet output target

India's second-largest coal producer Singareni Collieries will open the country's biggest underground mine next month with a capacity of 2.8 million tonnes per year, which should help it to just cross its output target for this financial year.

Singareni's better-than-expected output will ensure sufficient supplies to the south India power plants it caters for, at a time when the country is facing a severe shortage of coal. Nearly half of India's power plants have less than a week's stock of the fuel.

Singareni's output is just about 10 per cent of what state-owned Coal India Ltd, the world's largest miner, digs out. But its small size and focus on one state, Telangana, has helped it beat its production targets for years, unlike Coal India that has its mines across the country.

Sutirtha Bhattacharya, Singareni's chairman, said on Monday the company will be able to produce about 1-1.5 million tonnes this financial year from the new underground mine. Most of India's mines are easy-to-operate open cast pits.

The company expects to produce a total of 55 million tonnes in the current fiscal year ending 31 March 2015, and 56 million the year after that. Its target for the current fiscal year was 54.5 million.

"We are the only company to provide more than 100 per cent of what we commit to our power customers," Bhattacharya said. "We also make up for others' deficits and help in lowering imports."

Most of the power plants with critical-level stocks are suffering from low levels of supply from Coal India, which is struggling to raise output as rains slowed activity in some mines.

Coal India fell short of its production target of 183.9 million tonnes for April-August by 8 million tonnes. The company fears it may not be able to meet its commitment of supplying 408 million tonnes to power firms this fiscal year.

The inability of Coal India - accounting for 80 per cent of the country's coal output - to raise production fast enough has made India the world's third-largest coal importer despite sitting on the world's fifth-largest reserves.