Coal India Ltd., the world’s largest fuel supplier, will add production of a key ingredient used in mining explosives in a bid to meet soaring costs.
The company plans to produce around 700,000 tonnes a year of ammonium nitrate, about half the amount it consumes, as part of efforts to protect its profit margins, according to people familiar with the details. who asked not to be identified as they are not authorized to speak. publicly.
Coal India did not immediately respond to an emailed request for comment.
Miners around the world have been reporting pressure from rising energy, labor and chemical costs for months, with copper and gold giant Freeport-McMoRan Inc. among those who specifically called for higher ammonium nitrate prices. Concerns over supplies of the chemical compound – also used as fertilizer – intensified in February after Russia, a major producer, curbed exports.
Along with rising input costs, Kolkata-based Coal India is facing higher wages and soaring diesel prices. Some units are “struggling to survive without a price hike” and need to change long-term supply agreements, chairman Pramod Agrawal said on a call with analysts last month.
Agrawal said last month that the company would study plans to convert the coal to ammonium nitrate, although any decision would depend on the viability of the proposals.
Coal India is expected to launch a tender around the middle of the year for an operator to build and operate ammonium nitrate production facilities, the sources say. Raw materials would be available to the company’s existing explosives suppliers, including Indian Oil Corp., Solar Industries Ltd. and Gulf Oil Corp., the sources said.