Material Insights · Understanding the Material World

Coal mining and Thermal coal

Thermal coal is what most coal mines sell, so mine output and power station demand move together. In India the link runs through Coal India, which mined about 74% of the country's coal in 2024-25 and sells most of it to power plants on long contracts at prices set at home rather than by the seaborne market.

Coal mining (energy) and Thermal coal (energy): 5 relationships.

How they are linked

1. Every tonne starts at a mine

Physical flow · Strong · Coal mining → Thermal coal

Thermal coal has no other source: it is dug from open pits or underground seams, crushed and often washed before it is sold.

  • 9.1 Bt world coal production in 2025, level with the 2024 record
  • 1,047.5 Mt India's coal production in 2024-25, up about 5%

Most coal is burned in the country that mines it, so national mine output and national power demand are tightly paired. The IEA expects world output to dip in 2026, the first annual fall after several years of growth, partly because safety inspections after a fatal mine accident in Shanxi in May 2026 temporarily shut more than 100 Chinese mines.

Sources: IEA; The Statesman (Ministry of Coal data); IEA

2. Sold mainly to power stations

Physical flow · Strong · Thermal coal demand → Coal mining output

Power stations are the main buyers of mined coal, so their fuel needs set how much the mines dig and under what contracts.

  • 616 Mt Coal India supply to the power sector in 2024-25, against 661 Mt sought
  • about 74% share of Coal India dispatch expected to go to power in 2025-26
  • 757.5 Mtpa Coal India fuel supply agreement commitments (power, non-power and bridge linkage), March 2025

Fuel supply agreements tie a mine's output to named plants for years, so Indian mine planning follows the coal fleet rather than spot prices. Coal-based plants generated 1,299 BU of India's roughly 1,826 BU in 2024-25 from about 215 GW of capacity, which keeps demand for mined coal high even as renewables grow.

Sources: Coal India Limited (via India Infoline)

3. Coal India dominates

Geography and ownership · High in India · Both ways

One state-owned group mines most of India's thermal coal, so its targets, costs and pricing shape the domestic market.

  • 781 Mt Coal India production in 2024-25
  • nearly 74% Coal India share of India's coal output, 2024-25

National output still set a record in 2024-25 mainly because captive and commercial mines grew by about 30%, adding roughly 44 Mt of the year's increase of about 50 Mt. Coal India's pithead stocks stood at 106.78 Mt on 1 April 2025, a buffer for plants when demand peaks.

Sources: The Statesman (Ministry of Coal data); Coal India Limited (via India Infoline); Ministry of Coal, Government of India

4. Captive and commercial mining

Policy · Rising · Mine auctions → more thermal coal supply

India has auctioned coal blocks to power, steel and cement firms and to commercial miners, adding supply outside Coal India.

  • 190.95 Mt captive and commercial mine production in 2024-25
  • 29.79% growth in that output over 2023-24
  • 67.32% growth in commercial mine production alone, 2024-25

Captive output goes straight to the owner's plants, so it displaces both Coal India supply and imports. Output from these mines reached 203.70 Mt in calendar 2025, and the IEA expects captive and private mines to drive India's production growth in 2026.

Sources: IEA; The Statesman (Ministry of Coal data); Ministry of Coal, Government of India

5. Price link: product

Cost and price · Moderate · Both ways

Mines sell thermal coal, so mine prices should follow coal prices, but long utility contracts slow the pass-through.

  • 0.09 monthly change correlation, US coal mining index and Australian export coal
  • 0.48 12-month change correlation
  • 0.33 fitted elasticity

The link is weak month to month and clearer over a year, as contracts reset. India is more insulated still: Coal India's average sales price fell from ₹1,728 to ₹1,667 a tonne between 2023-24 and 2024-25, while seaborne Newcastle coal moved with world energy markets, rising from USD 115 a tonne in February 2026 to an average USD 139 in June 2026.

Sources: IEA; Coal India Limited (via India Infoline); Material Insights (World Bank, FRED, IMF data)

For investors

Key learnings

  1. Indian thermal coal is priced at home: Coal India's average realisation barely moves with seaborne prices, so its earnings depend on volumes, costs and e-auction premiums more than on Newcastle.
  2. Growth in Indian supply is shifting to captive and commercial mines, which grew about 30% in 2024-25, so Coal India's share of a growing market is likely to slip.
  3. World coal output is on a plateau near 9.1 Bt, so mining value comes from cost position and contract cover rather than from rising global volumes.

What to track

  • Coal India monthly production and offtake: Shortfalls against target signal tighter domestic supply and more imports or captive output (Monthly · Coal India, Ministry of Coal)
  • Coal India e-auction premium over notified price: A rising premium signals scarce domestic coal and higher realisations (Quarterly · Coal India results)
  • Newcastle 6,000 kcal FOB price: Shows the cost of imported coal against which Indian coal competes at coastal plants (Daily to monthly · globalCOAL, World Bank Pink Sheet)

For policymakers

Key learnings

  1. Domestic mining is India's main shield against imported fuel prices, with about 1,047 Mt mined in 2024-25 against 243.6 Mt imported.
  2. Commercial mine auctions are working as a supply lever, but their coal goes mainly to the owners' plants, so they do not replace Coal India's role in public power supply.
  3. Coal stocks at mines and plants are the practical security buffer: plant stocks of about 50 Mt covered 21 days of use at the end of 2025.

What to track

  • Coal stocks at power plants, days of cover: Falling days of cover warn of shortages ahead of summer peaks (Daily · Central Electricity Authority)
  • Captive and commercial mine output: Shows whether auctioned blocks are delivering planned supply (Monthly · Ministry of Coal)
  • Coal imports for blending: Rising imports signal domestic supply falling short of power demand (Monthly · Ministry of Coal, port data)

India

India mined a record 1,047.5 Mt of coal in 2024-25, about 74% of it by Coal India, and still imported 243.6 Mt; coal-based plants made about 71% of its electricity in that year.

Sources

  1. Coal Mid-Year Update 2026: Overview, IEA (2026)
  2. India records highest-ever coal production at 1,047 MT in FY25, The Statesman (Ministry of Coal data) (2026)
  3. Coal India Ltd: Management Discussion and Analysis, Annual Report 2024-25, Coal India Limited (via India Infoline) (2025)
  4. Record production and dispatch from captive and commercial coal mines in FY 2024-25 (PIB release), Ministry of Coal, Government of India (2025)
  5. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  6. Coal Mid-Year Update 2026: Production, IEA (2026)