Coal India Ltd., the world’s largest miner of the fuel, reported a 10% drop in first-quarter profit on waning prices and following a sharp hike in staffing costs.
Net income for the three months through June fell to 79.4 billion rupees ($959 million) from a record a year earlier, the company said Tuesday. Profit was higher than the average estimates compiled by Bloomberg.
Production across the coal sector has largely kept pace with rising demand, meaning there have been fewer opportunities to charge premium prices at auctions for short-term or uncontracted cargoes.
The Kolkata-based producer has been allocating vast amounts of capital to expand its output and respond to India’s demand to prevent disruptions and curb reliance on imported fuel. Though Prime Minister Narendra Modi’s government is championing a huge rollout of cleaner energy sources, coal continues to generate about three-quarters of electricity and will likely still account for more than half by the end of the decade.
Read More: India Plans to Keep Adding Coal Power Capacity as Demand Surges
Coal India in May made the first increase in five years to prices of some grades of products, in an attempt to offset a hike in its nearly $6 billion annual wage bill following lengthy negotiations with labor unions. A nearly 55% increase in income outside core operations also limited a contraction in profits, as the miner earned higher interest on cash deposits.
The company shipped 187 million tons of coal during the quarter, about a 5% increase on the same period in 2022. Production rose almost 10% to 176 million tons. The company earned an average 1,769 rupees a ton on sales during the period, a 3.3% decline caused by lower realizations in auction sales.
--With assistance from Debjit Chakraborty.
(Updates with details on interest income in fifth paragraph.)
