Hyderabad: The underground mining is making a big dent in the profits of Singareni Collieries Company Limited. The improper use of high-cost machines and the low productivity of coal workers in underground mines are said to be the main reason for higher costs in underground mining.
According to officials, the company is incurring a daily loss of Rs 1.8 crore because of higher production costs in the underground mining, which makes it difficult to survive in the market.
The company has conducted several awareness campaigns to motivate the workers to improve the coal production and use of high cost machinery, but they have not seen any improvement. Since the profit from coal sales has reached less than one per cent, the company is unable to venture into new areas and go ahead with the expansion plans
The company spends Rs 9,500 to excavate one tonne of coal from an underground mine. However, the selling price is around Rs 4,000 per tonne, making the company lose Rs 5,500 per tonne.
Deputy Chief Minister Bhatti Vikramarka told the company officials that it would be difficult to survive if Singareni cannot compete with Coal India and other private coal companies. He said the customers would desert Singareni, if this situation continues. The company is currently operating 48 mines. Of these, 19 opencast and 29 underground mines in six districts of Telangana.
Besides low productivity, the company is facing higher employee costs and a high stripping ratio of coal reserves. If Singareni fails to improve its production from underground mines it could see margin pressure as it continues to have high fixed operating expenses in the form of employee payouts and higher other operating expenses.
Singareni plans to diversify into new businesses like solar power generation, green hydrogen, lignite mining among others. However, if its core business does not perform well, it would dent its plans. The failure of coal workers to use heavy machinery in the underground mines in comparison to open cast mines is one of the major factors for low productivity. The company wants the workers to use at least 15 hours per day if not 20 hours to reduce the production costs.
