A sharp surge in key mining inputs—industrial diesel prices rising 54% and explosives raw material costs jumping 44% within weeks has significantly increased coal production costs, underscoring the impact of global supply disruptions on India’s core energy sector.
State-run Coal India Limited (CIL), which accounts for the bulk of domestic coal output, said it is absorbing the rising costs to avoid a wider pass-through. “Despite spiraling operational costs… the company is absorbing the price shock insulating India’s coal users from escalating cost burden,” it said.
Global Supply Disruptions
The cost pressures follow the escalation of the West Asia crisis, which has disrupted supply chains and pushed up prices of critical industrial inputs used in mining operations.
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Explosives costs have risen sharply, driven by a surge in ammonium nitrate (AN) prices — up 44% from ₹50,500 per tonne to ₹72,750 per tonne as of April 1, 2026.
This has translated into a 26% increase in average explosives costs, rising from ₹39,588 per tonne in February to ₹49,783 per tonne by March-end, directly impacting blasting operations in opencast mines.
Given that CIL consumes nearly 9 lakh metric tonnes of explosives annually, the cost escalation is significant at scale.
Fuel costs have seen an even sharper spike. Industrial diesel prices have increased from ₹92 per litre in mid-March to ₹142 per litre as of April 1, marking a 54% rise within a short span.
With annual diesel consumption of around 4.19 lakh kilolitres, the increase is expected to materially raise operational costs across mining activities, including excavation and transportation.
Market Recalibration
“The company is also compensating the increased price of the industrial diesel to the contractors… who purchase it in bulk quantities,” CIL said, indicating the pressure on the supply chain.
While costs continue to rise, the company has held back any immediate pass-through to consumers. “Any pass through of the mounting prices would lead to a cascading effect,” it said.
Instead, CIL has recalibrated its market strategy, including reducing reserve prices in select e-auctions and increasing supply volumes.
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The recent spike in industrial diesel prices—up over 50% in a matter of weeks—has emerged as a key pressure point across energy-intensive sectors.
Diesel remains a core input for mining and logistics, and sustained volatility could have broader implications for cost structures across the industrial and power value chain.
TOPICSCoalDieselThis article was first uploaded on April ten, twenty twenty-six, at fifteen minutes past six in the evening.