UPDATE 1-Coal India units see double-digit output growth in 2014/15

Tue Feb 18, 2014 6:46am EST

* Mahanadi Coalfields expects output to rise 18 pct to 135 mln tonnes in 2014/15

* Western Coalfields expects to raise output 10 pct to 44 mln T in 2014/15 (Adds figures for Mahanadi Coalfields, details)

By Krishna N Das and Jatindra Dash

NEW DELHI/BHUBANESWAR, Feb 18 (Reuters) - Two Coal India units that together account for a third of its production expect double-digit growth in output next fiscal year as they use more sophisticated machinery and expand mines, officials at the units said on Tuesday.

The expected production jump will help India keep a lid on imports of coal, which have surged in recent years due to regulatory, environmental and land acquisition delays in starting new mines at home.

Mahanadi Coalfields, a Coal India unit with operations in the eastern state of Odisha, expects output to rise to 135 million tonnes next fiscal year from about 114 million this year, Director Of Operations A.K. Tiwari told Reuters.

"We expect 2014/15 to be better as we're likely to get environmental clearances to expand some mines," he said, adding that output this fiscal year would be below its target of 120 million due to employee strikes and flooding in some mines.

Western Coalfields, another unit that focuses on the western state of Maharashtra and the central state of Madhya Pradesh, expects production to rise 10 percent to 44 million tonnes in 2014/15, Chairman Dinesh Chandra Garg said by phone.

The unit's first potential output increase in five years will come largely from increasing the use of loaders and dumpers in underground mines, application of more conveyor belts and replacing hand-held drill machines by universal drill machines.

Garg said he could not predict which mines would help raise Western Coalfields' production in 2014/15. It runs 82 mines, which accounted for about 9 percent of state-run Coal India's output of 366.6 million tonnes in the April-January period.

Coal India, which accounts for about 80 percent of the country's output, has been unable to meet growing demand, which has made India the world's third-largest importer of coal even though it sits on what British energy group BP Plc ranks as the fifth-largest reserve.

As a result, coal imports rose 21 percent to 152 million tonnes in 2013, with power producers buying the most, data from research firm OreTeam showed. Shipments could reach 170 million tonnes in 2014, it added.

Coal India's production for the year ending March 31 will probably be 475 million tonnes, about 7 million short of its target, as production was hit by employee strikes and a cyclone that flooded mines, a company official said.

Its target for the next fiscal year is likely to be finalised by next week, the official said, requesting anonymity.

India's coal production is targeted to rise 8 percent to 604 million tonnes in 2013/14 and reach 795 million by 2016/17, Coal Minister Sriprakash Jaiswal said earlier this month. Actual output has frequently fallen short of the government targets.

The shortfall in India has helped top suppliers such as Indonesia, Australia, South Africa and the United States raise their exports over the years. (Editing by Muralikumar Anantharaman and Jane Baird)

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