In view of the rising demand for coal, Singareni Collieries Company Limited has recently levied a premium on coal from select mines ranging from Rs 109 to 521 per tonne over the basic price depending on the quality and the distance from the customers.
The new prices, which have come into effect from April, are expected to bring in an additional Rs 20 crore to the coal company this year. More than the revenues, the exercise is part of the efforts to spread the customer base uniformly across the mines.
“There has been more demand for coal from certain mines. This will upset the distribution cycles,” SCCL chairman and managing director S Narsing Rao told Business Standard. However, the power utilities are exempted from the price rise.
According to Rao, there would be minor quality variations in coal across the mines. However, many were intended to have coal from only specific mines due to logistics reasons as transport costs add to the overall landing costs.
The premium, which is about 10 per cent of the base price of coal, is fixed based on the quality, availability and transportation ease, he said.
The highest premium of Rs 521.51 has been levied at a mine in Ramagundam because of its A Grade coal, which has a useful heat value of more than 6,200 kilocalories per kilogram.
“The premium on coal increases the input costs. The recent power cuts have already put the cement companies under pressure,” said a cement company representative, adding that the additional costs are being passed on to the customers.
SCCL supplies an estimated 8 million tonnes of coal per annum to cement plants in the southern states. This translates into a cement production of 48-50 million tonnes.
The average landing cost, depending on the distance, is about Rs 2,500 a tonne before the premium for C Grade coal. Coal costs account for 17 per cent of the expenditure incurred in cement production.
Apart from the power sector, which is the largest consumer of coal, SSCL supplies coal to agro products, brick, ceramics, chemical, dairy, distilleries, glass, leather, cement and a host of other units.
