Prakash Industries Limited, a prominent player in the Indian steel and energy sectors, has recently secured a significant boost to its operations by acquiring a 30-year mining lease for the Bhashkarpara coal block in Chhattisgarh state. The company made the announcement on November 26, 2024, marking a major milestone in its strategy to strengthen its steel production capabilities and lower costs. This new lease allows PIL the right to extract coal from the Bhashkarpara block, a critical asset for its integrated steel operations.
The acquisition of this coal block is expected to have a profound impact on PIL’s operations. Starting in December 2024, the company will begin the initial phase of overburden removal, which is the process of clearing the soil and rock layers above the coal deposits. By the first quarter of 2025, PIL plans to begin full-scale coal extraction. The coal extracted from Bhashkarpara will directly feed into the company’s steel production processes, ensuring a stable and cost-effective supply of raw material for its operations.
One of the key benefits of securing the Bhashkarpara coal mine is the enhanced stability it brings to PIL's integrated steel operations. The company currently produces billets, long products, and other critical raw materials at its steel mill in Chhattisgarh. By utilizing coal from its own mine, PIL can mitigate the risks associated with fluctuating coal prices and supply chain disruptions. As the global steel industry faces challenges related to raw material availability, having direct access to a reliable coal source will help PIL maintain consistent production levels and optimize its manufacturing processes.
In addition to the operational advantages, the coal from Bhashkarpara will also result in significant cost savings for PIL. Coal is one of the most crucial inputs in steel production, and securing a reliable, in-house source will reduce the company’s reliance on external suppliers. This reduction in procurement costs will directly lower production expenses, thereby enhancing the company’s overall cost competitiveness in the market. Furthermore, the ability to mine and process its own coal will provide PIL with greater control over its supply chain, ensuring timely availability and quality of the raw material.
Beyond serving its own steel mill, PIL also plans to sell coal from the Bhashkarpara block in the open market, which will contribute to the company's revenue generation. As a commercial mine, the Bhashkarpara block provides PIL with the opportunity to capitalize on coal sales, further boosting the company's profitability. The coal market in India and globally has been volatile in recent years, but PIL is positioning itself to take advantage of market fluctuations by securing a stable source of supply while also tapping into lucrative sales opportunities.
