Trade union strike hits output at Coal India

A one-day strike by trade unions in India today has hit output at state-controlled producer Coal India (CIL), potentially curbing the company's broader production plans. But the extent of the impact on production is unclear.

Major trade unions called a nationwide strike against what they described as the government's pro-privatisation and commercialisation policies.

The strike hit operations in the coal, banking and other sectors, with as many as 250mn workers from across industries estimated to be supporting the industrial action, the trade unions said.

The strike cut CIL's output by at least half of its daily target of about 2mn t/d, SQ Zama, secretary general of Indian National Mineworkers' Federation, told Argus. Some output continued as the strike was not exclusively called over coal sector issues and some mine staff went to work, he added.

Roughly half of CIL's around 250,000 mine workers and about a third of the 30,000 miners at fellow state-controlled producer Singareni Colleries (SCCL) are likely to have joined today's strike, along with an additional 100,000 contract workers at both the firms. This is despite one of the national unions that is associated with the ruling Bharatiya Janata Party opting not to take part in the strike, Zama said.

The actual amount of production affected will only become clearer by late today or tomorrow, but the production loss is unlikely to be severe as more than 80pc of CIL's miners were at work until early afternoon, a company official said.

The production loss adds to a string of challenges the company has faced as it attempts to ramp up its production. CIL produced 606.89mn t of coal in the April 2018 to March 2019 fiscal year and has targeted output of 660mn t for 2019-20. But production has lagged targets and may even decline.

The strike also affected operations at SCCL, although the company said there should be "very little" impact on production given efforts to dispel fears of any privatisation of the firm. SCCL provided security to miners that worked today.

CIL's shares on the Bombay Stock Exchange closed 2.6pc lower at 200.20 rupees/share ($2.79/share) today, the lowest in around two weeks.

CIL ended a run of five consecutive months of output declines in December, when its production rose by 7.2pc.

The monthly increase in production at CIL, which meets more than 80pc of India's coal demand, had raised the prospect that the company could at least hit last year's output level after extended monsoon rainfall and flooding hurt its operations in recent months.

But even approaching the year-earlier level now appears to be a daunting task, potentially raising imports.

India's thermal coal receipts rose to 15.62mn t in December from 12.5mn t a year earlier, provisional data from e-commerce firm Mjunction show. Imports in January-December 2019 were 172.92mn t, up from 158.52mn t a year earlier.

By Saurabh Chaturvedi