State-owned GMDC to expand lignite production as demand increases

Company says 10 million tonnes production this year, sees gaining business from small businesses

State-run Gujarat Mineral Development Corporation (GMDC) will expand its lignite coal production to gain from small and medium enterprises (SMEs) looking for cheaper fuel.

GMDC produced 8.5 million tonnes of lignite last year and plans to reach 10 million tonnes this year. "In the last six months, we have added 400 more customers and customers are increasing day-by-day. Our customer base among MSMEs in textiles, chemicals, and ceramics along with captive power plants is increasing since coal prices continue to remain high. Hence, we are increasing our lignite production this year by an additional 1.5 million tonnes even as we look to add more mines in near future," said a GMDC spokesperson.

The company will add six more mines, leaving it with a total of nine in the next 4-5 years. GMDC's managing director Roopwant Singh has said the company employs Deloitte for fast-tracking new lignite mining projects.

With coal prices being as high as Rs 8000 per tonne to Rs 10000 per tonne and beyond, average lignite prices tend to be around Rs 4000-4500 per tonne, making it viable for MSMEs to opt for the latter.

According to the GMDC spokesperson, while lignite mining will continue to be the largest contributor to the company's revenue at over 90 per cent, the PSU plans to add other streams of revenue including bauxite mining and thermal power, among other things.

In fact, as part of its growth plans, GMDC is not only tapping into its existing businesses including lignite mining but also foraying into rare earth elements (REE) mining. The mining company has roped in the Boston Consulting Group (BCG) for its strategic transformation, apart from McKinsey & Co. for the development of REE assets.

Meanwhile, apart from lignite expansion, the company is working at improving bauxite mining that is used in alumina, apart from mining of fluorspar.

"While we have bauxite and fluorspar mines, the production has not been as desired. We are trying to resolve production issues even as we come up with better marketability for these products," the spokesperson added.

For the financial year 2021-22, GMDC had registered a net profit of Rs 405 crore as against a net loss of Rs 35 crore in FY'21 even as its total consolidated income grew by 93 per cent to Rs 2889 crore for FY'22, up from Rs 1496 crore in the previous fiscal year 2020-21.