Coal India considers price hike to offset wage, salary increases

04 December 2017

Coal India Limited (CIL) is mulling the option of increasing its coal prices across all grades to offset the impact of a hefty wage increase agreement signed with trade unions and the imminent hike in salaries of executives.

Sources have pointed out that the salaries and wages bill provisions for the year will not be sufficient to cover the increases that the miner and employees have agreed upon.

They say that the wage agreement signed between CIL management and trade unions will lead to an increase in the wage bill to about $892-million a year. On Tuesday, sources also said that CIL was considering a salary hike for all its executives and that this could cost the miner about $125-million in a year.

CIL employed 300 000 people of which 18 000 are in the executive cadre.

It was pointed out that CIL achieved offtake growth of 6.9% in July, 19.1% in August and 15.5% in September, but that its net profit during the quarter was down 40% over the corresponding period of the previous financial year, indicating that production and offtake growth will not be sufficient to protect the bottom line, without an across-the-board price hike.

However, no indication was available on the quantum of the coal price increase being considered, with the sources saying that fixing a new price is an elaborate exercise involving various grades of coal and location of mines.

However, the sources say that increasing the price of coking coal will not face much resistance from user industries in the steel sector, as imported coking coal prices too have been firming up over the past few months. However, an increase in the price of thermal coal could have political implications as it translates into higher tariffs to be passed on to consumers by thermal power plants and distribution companies.

CIL increased prices by an average of 10% across all grades in May 2017.

Source: Mining Weekly