State-run Coal India Limited (CIL) is absorbing a sharp rise in input costs to shield consumers from higher coal prices, even as expenses for critical inputs like explosives and industrial diesel have surged sharply due to the ongoing West Asia conflict.
The company stated that it has deliberately refrained from passing on the increased costs, cautioning that doing so could trigger a cascading effect across multiple sectors dependent on coal. To further ease the burden, CIL is also compensating contractors working in its mines for the higher diesel expenses they are incurring.
Prices of ammonium nitrate (AN), a key component that makes up nearly 60 per cent of explosives used in opencast mining, have climbed steeply. As of April 1, rates rose 44 per cent to Rs 72,750 per tonne compared to pre-conflict levels. This surge has driven up the average cost of explosives by about 26 per cent, reaching nearly Rs 49,800 per tonne by the end of March.
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Coal India’s subsidiaries collectively consume around 0.9 million tonnes of explosives annually and the company confirmed that it is currently bearing the entire increase in cost.
Diesel prices have also witnessed a significant spike, rising approximately 54 per cent to Rs 142 per litre from about Rs 92 in mid-March. During the financial year ending March 2026, CIL’s diesel consumption stood at nearly 4.19 lakh kilolitres.
Despite mounting cost pressures, the company has taken several measures to ensure coal remains affordable. These include reducing reserve prices in select e-auctions, increasing the frequency of auctions and offering larger volumes of coal to the market.
The objective behind these steps is to cushion downstream industries and consumers from rising energy costs, while maintaining price stability in a volatile fuel market. Officials reiterated that passing on the increased costs could have widespread ripple effects across the economy.
CIL is also reimbursing contractors for the higher cost of industrial diesel, which they procure in bulk for mining operations.
Before the West Asia crisis, ammonium nitrate prices applicable to CIL had remained stable between August 2025 and January 2026. However, prices began rising thereafter, reaching Rs 50,500 per tonne by March 1, 2026, before accelerating further.
The sharp rise in AN prices has directly impacted the cost of explosives, which are extensively used in blasting operations to remove overburden and expose coal seams. Consequently, the average cost of explosives increased by around 26 per cent, from Rs 39,588 per tonne in February 2026 to Rs 49,783 per tonne by the end of March.
In the recently concluded 2025–26 fiscal year, diesel consumption stood at approximately 4.19 lakh kilolitres, with one kilolitre equivalent to 1,000 litres.
At a time when energy prices are rising globally, CIL has not only absorbed cost increases but also adjusted its market strategies. Some of its subsidiaries have lowered reserve prices under the Single Window Mode Agnostic e-auction system, while also increasing both the frequency of auctions and the volume of coal offered.
Through these measures, the company aims to supply coal at affordable rates to consumers across the country, helping to contain the broader impact of rising energy costs.
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