Prakash Industries Limited (PIL) announced a significant development, securing a 30-year mining lease for the Bhaskarpara Commercial Coal Mine in Surajpur district, Chhattisgarh. The lease agreement with the Government of Chhattisgarh marks a major milestone for the company’s integrated steel operations.
The company is set to begin overburden removal next month, with coal production anticipated between January and March 2024. This development aligns with PIL’s plan to enhance its operational stability and reduce costs, leveraging coal supplies from this new mine.
The Bhaskarpara coal mine boasts an extractable reserve of 24.06 million tonnes, making it a game-changer for Prakash Industries. The coal’s suitability for the company’s integrated steel plant in the Janjgir-Champa district ensures a steady supply, significantly reducing dependency on external sources like Coal India Limited (CIL) and foreign imports.
Furthermore, as a commercial mine, Bhaskarpara opens avenues for additional revenue through coal sales in the open market. This dual benefit of cost savings and enhanced profitability positions PIL for long-term growth.
Prakash Industries has a diversified business portfolio, spanning mining, steel, and power sectors. Its emergence as the highest bidder for the Bhaskarpara mine in the 2019 Ministry of Coal auction underscores its strategic focus on securing vital resources for integrated operations.
This acquisition is poised to transform the company’s coal procurement strategy and solidify its competitive edge in the steel industry.
On November 24, the share price of Prakash Industries closed higher by 1.10%, recovering slightly from a weekly decline of 4%. However, the stock remains below its 200-day moving average (200-DMA) of Rs 178.52, indicating a cautious sentiment among traders.
As the mining lease news unfolds and coal production nears, investor attention will likely intensify. The stock’s performance on November 25 will be crucial, with potential volatility reflecting market reactions to this significant development.
The long-term mining lease and its implications for cost efficiency and revenue generation make Prakash Industries a stock to watch. The company’s strategic steps toward self-sufficiency in coal supply could enhance profitability and strengthen its position in the steel sector.
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.
Published on: Dec 9, 2024, 10:41 AM IST
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