Coal India Wins Bid for Khattali Chotti Graphite Block

On July 22, 2024, Coal India Limited (CIL) announced via a stock exchange filing that it had made its first move into domestic critical minerals by winning the bid for the Khattali Chotti graphite block in Madhya Pradesh. This was part of the second tranche of auctions held by the Ministry of Mines on July 9. It marks CIL’s first venture into mining non-coal minerals.

CIL won the bid by offering a mining premium of 150.05% of the mineral’s value, which will be paid to the state of Madhya Pradesh. Once CIL deposits the required performance security, it will receive a formal letter of intent. A composite license will be issued within a year after CIL completes all necessary steps. This win came through the second tranche of mineral block auctions organised by the Ministry of Mines as part of CIL’s efforts to diversify its portfolio.

With this move, CIL is set to play a vital role in domestic critical minerals. The Khattali Chotti block, which covers nearly 600 hectares, has fixed carbon content ranging from 1.99% to 6.50%. India imports about 69% of its graphite, including both natural and synthetic types. Currently, there are few players in the graphite mining industry, which creates opportunities for new entrants.

Graphite is important for making lithium-ion batteries due to its low cost and energy density. As the market for EV and energy storage systems grows, the demand for graphite is expected to increase significantly.

Owning a graphite asset will help CIL contribute to the green energy transition. The company’s long experience in mining is another advantage. The graphite market is expected to grow significantly, with demand projected to increase by 25%-27% by FY 2035.

About Coal India Limited

Coal India is a government-owned company that mines, produces, and operates coal washeries. Its main customers are the electricity and steel industries, but it also supplies coal to other sectors like cement, fertilisers, and brick kilns. The company aims to produce and sell coal and related products efficiently and cost-effectively while ensuring safety and maintaining quality.

On July 22, 2024, the share price of Coal India Limited opened at ₹488.00, touching the day’s high of ₹496.00 as of 12:48 PM on the NSE.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.