Strike at World’s Biggest Coal Miner Seen Blunted by Indian Glutby and
Coal India output may be reduced by 1.5 million tons a day
Power plants have enough stockpiles to last about 21 days
India’s ample coal stockpiles may blunt the power of unions planning a strike at Coal India Ltd., the world’s biggest miner of the fuel.
Labor groups including All India Coal Workers’ Federation are demanding the company start early wage talks and begin recruiting to fill vacancies, as well as calling on the government to stop selling its shares of the company. The one-day strike scheduled for Sept. 2 may cut output by about 1.5 million metric tons from the Kolkata-based miner, which produced 536 million tons of coal in the year ended March 31.
“The problem for the unions is the days of coal shortages are over,” said Goutam Chakraborty, a Mumbai-based analyst at Emkay Global Financial Services. “Coal India can afford to lose a day’s production, rather than agreeing to an unreasonable demand.”
Trade unions at Coal India have used strikes as a tool to achieve goals from higher wages to an increase in bonus payments. This time, the threat comes before talks to revise non-executive wages. The company is aiming to reach 1 billion tons of annual output in four years, while curbing costs to protect profitability.
“We have plenty of coal stocks to meet any shortfall in production,” said R. Mohan Das, Coal India’s director personnel & industrial relation. “The unions have asked for a 50 percent increase in wages. There is no chance we can agree to that.”
About 95 percent of Coal India’s more than 300,000 workers are supporting the strike, All India Coal Workers’ Federation General Secretary D.D. Ramanandan said.
“The strike is on and there is no likelihood of calling it back,” Ramanandan said, adding that all but one major workers’ union is supporting the strike. “Neither the company management nor the government is talking to us now. But, we will force them to talk.”
The Bharatiya Mazdoor Sangh, a union backed by the ruling party, isn’t joining the strike, Pradeep Dutta, a general secretary at the union’s mining unit, said by phone.
Power plants are awash with coal, compared with earlier situations when even a day’s disruption in output could cause blackouts in parts of the country. India’s power plants had coal stocks of a combined 29 million tons as of Aug. 23, which would last them an average 21 days, according to India’s Central Electricity Authority.
Coal India revises non-executive salaries every five years and the next revision is due from July 1. The company holds meetings with union representatives before deciding on the revision.
“Given the comfortable inventory of coal in the country, Coal India will not face any supply issues because of a one-day strike,” said Abhisar Jain, an analyst at Mumbai-based Centrum Broking Pvt. “Coal India does have a strong cash reserve and has an ability to pay. But it has to ensure that there isn’t a big blow to profitability.”
For the five years ended June 30, Coal India increased non-executive gross salaries by 25 percent and topped it up with another 4 percent increase in basic salaries. Centrum’s Jain said he expects an increase of 20 percent-25 percent “in case of very hard negotiations.” Anything more than that will be seen as negative, he said.