CIL wage costs may rise 19pct this fiscal - JP Morgan

Thursday, 25 Aug 2011

Investment banking major JP Morgan said that state run mining giant Coal India, which is under pressure from labor unions for a salary hike, could see its wage costs rise by as much as 19% this fiscal.

JP Morgan in a research note said that "The wage cost increase from July 1 would impact the non executive segment, which is 85% of the wage bill. We are building in a total wage cost increase of 19% in FY12E, which includes the inflation impact and the wage agreement hike.”

Four of the five trade unions of Coal India have put up their wage demands to the management, demanding salary hikes ranging from 100% to 500% which is likely to put severe financial pressure on the company.

The current average basic salary of Coal India worker is about INR 8,320 per month.

While the Left-backed All-India Trade Union Congress has asked for a revised salary of INR 16,000 per month, the Hind Khadan Mazdur Federation has asked for a minimum revised basic salary of INR 40,000 per month.

At present, Coal India and its subsidiaries spend about INR 20,000 crore on salaries every year, accounting for over 40% of the cost of production.

The unions have also demanded better parity between workers on its payroll and workers on a contract, as well as between workers and officers.

(sourced from ET)

Update Coaltrans India, New Indonesian coal regions seen as a ‘good fit’ for India

Tue, Mar08, 2011 By Creamer Media Reporter

PERTH (mining weekly. com) − Emerging coal supply areas in Indonesia would be instrumental to meeting rapidly growing coal demand from India, research firm Wood Mackenzie said on Tuesday.

Coal research analyst Rohan Kendall said at the Coaltrans India conference that Indonesia would account for 40% of growth in seaborne thermal coal supply over the next ten years, with the emerging coal areas of the South Sumatra basin and Wahau coalfield making an important contribution to this growth.

“There is $8-billion of infrastructure projects in the pipeline in these emerging areas that will support export growth,” Kendall said.

Emerging coal regions were a “good fit” for developing economies, such as India. These areas were experiencing upstream investment as Indian power generators such as Reliance and Adani looked to secure coal supplies for new power stations.

He noted that there were currently several ultramega power plants being built in India with a capacity of over 4 000 MW each, and still more were planned. The projects currently in development were similar in capacity to those in China and were expected to be operational between the second half of 2011 and 2014.

“Coal production costs are low in emerging basins in Indonesia, which is why they are attractive to Indian power generators. The costs of investing upstream to secure coal requirements are much lower than Indian power generators would otherwise pay if they were to purchase all of their coal on the seaborne market.

“Also, for power stations that are being built on the coast, it is more realistic to seek seaborne supplies which do not depend on India’s rail network for transport,” he added.

The research firm noted that in order for emerging thermal coal supply areas to fulfill their potential, infrastructure challenges needed to be overcome.

“There is currently insufficient infrastructure in these areas to support large scale coal exports. There are numerous projects proposed which combined would add 140-million tons a year of capacity. We believe that some of these are unlikely to progress given regulatory challenges.”

Edited by: Mariaan Webb