Despite spiraling operational costs, on account of increased prices of explosives and industrial diesel, the State owned Coal India (CIL) is absorbing the price shock insulating India's coal users from escalating cost burden. Any pass through of the mounting prices would lead to a cascading effect. The company is also compensating the increased price of the industrial diesel to the contractors, operating in CIL's mines, who purchase it in bulk quantities.

The cost of Ammonium Nitrate (AN) which makes up for around 60% of the material composition in manufacturing of explosives, which CIL uses in its opencast mines, increased by 44 percent from pre-war level of Rs.50,500 per metric ton to Rs.72,750 metric per ton as of 1 April 2026.

Prior to the West Asian crisis AN prices applicable to CIL held steady from August 2025 till January 2026 before touching Rs.50,500 per metric ton as of 1 March 2026 and since then had taken an upward route.

This sharp increase in the price of AN had a direct bearing on the cost of explosives that CIL uses in large quantities in blasting operations to uncover overburden and expose coal seams. As a result, the average cost of explosives shot up by around 26% from Rs.39,588 per metric ton in February 2026 to Rs.49,783 per metric ton by March end.

Annually, CIL's producing subsidiaries consume around 9 Lakh metric tons of total explosives.

Diesel was another important component where the price was shot up. In most of the CIL's subsidiaries the price of the industrial diesel increased by around 54 percent from Rs. 92 per litre in mid-March 2026 to Rs. 142 per litre as of 1st April 2026.

During the recently ended fiscal 2025-26 the consumption of diesel was around 4.19 Lakh Kilo Litres (KL). One KL is equivalent to 1000 Litres.

At a time when the energy prices are surging ahead, apart from absorbing the price shocks, some of CIL's subsidiaries have reduced the reserve price of coal in Single Window Mode Agnostic e-auction. The company has also increased the frequency of auctions and the quantum of coal to be put under the auction. CIL intends to supply the dry fuel at an affordable price to the country's citizens to cap the consequent costs.