The Indian government wants coal India to cut the price of high-quality coal

Recently, according to foreign media reports, the Indian government wants Indian coal companies to cut the price of high-quality coal, but company managers are worried that this move will cause the Eastern Coalfield Company and Bharat Coking Coal Company to face losses
.

Internationally, coal prices are calculated based on calorific value rather than the overall quality of coal, so buyers of high-quality coal and low-quality coal are calculated according to the calorific value contained in it
.
Inferior coal has a low calorific value, so the price is low, and high-quality coal has a high calorific value, so the price is high
.
This was not the
case for the Eastern Coalfield Company and the Bharat Coking Coal Company.
Eastern Coalfield Company has significantly reduced the price of low-quality coal, while the price of high-quality coal is only slightly higher than the cost of
mining.
This has led buyers to prefer to buy the company's inferior coal because of its lower
price.

However, high-quality coal mainly comes from underground mines, which are more expensive to mine
.
Eastern Coalfield's prime coal business lost 26 billion rupees (2.
5 billion yuan)
last year.

At current coal prices, the company's high-quality coal business is still losing money, and the loss can only be recovered by selling open-pit coal, which is cheap to mine
.

A Coal India executive said: "Now, if the price of high-quality coal is further reduced, all of our coal businesses will face losses
.
However, if Coal India eliminates the calorific value difference between inferior and high-quality coal, Eastern Coalfields can compensate for the loss
of the premium coal business by selling the revenue from the sale of low-quality coal.
If the price difference between low-quality coal and high-quality coal is eliminated, the price of low-quality coal will rise sharply, and buyers may not accept it
.
In FY 2014-15, Eastern Coalfields produced about 20 million tonnes of high-quality coal, or 50% of its total production, so the company's 50% coal price discount was significant, while the remaining coal price barely covered production costs
.
”

Another Indian coal executive said: "We are walking a tightrope, and any change made regardless of the overall composition of the company's products will result in losses
.
" ”

The situation is the same for the Bharat Coking Coal Company
.
The price of low-quality coal has fallen sharply, while high-quality coal is relatively expensive, so lowering the price of high-quality coal will cause the company to face losses
.

(This article uses the real-time exchange rate: 1 rupee is equivalent to about 0.
096 yuan)