Coal India Limited is absorbing a sharp escalation in its two most critical operational input costs — explosives and diesel — without passing them on to coal users, the Maharatna company disclosed on April 10, 2026, in a move that shields India’s power sector, industrial consumers, and the broader economy from a cost cascade at a moment when energy prices are already under severe pressure from the Iran war and Strait of Hormuz disruption.
The numbers behind the absorption are significant. Ammonium nitrate, which constitutes approximately 60% of the material composition of the explosives CIL uses in its opencast mining blasting operations, has surged 44% from pre-war levels of Rs 50,500 per metric tonne to Rs 72,750 per metric tonne as of April 1, 2026. Ammonium nitrate prices had held steady from August 2025 through January 2026, touched Rs 50,500 per metric tonne as of March 1, 2026, and then moved sharply upward as the Iran conflict disrupted global petrochemical and fertilizer supply chains — ammonium nitrate is a nitrogen-based compound whose production is energy-intensive and whose global supply is sensitive to natural gas price movements.
The direct consequence of the ammonium nitrate spike has been an approximately 26% increase in the average cost of explosives for CIL — rising from Rs 39,588 per metric tonne in February 2026 to Rs 49,783 per metric tonne by the end of March. CIL’s producing subsidiaries consume around nine lakh metric tonnes of total explosives annually, making this a material cost line that, if passed through, would have significant implications for coal pricing across the country.
The diesel situation is even more stark. Industrial diesel prices across most CIL subsidiaries surged approximately 54% from Rs 92 per litre in mid-March 2026 to Rs 142 per litre as of April 1 — a consequence of global crude prices spiking above $115 per barrel as the Strait of Hormuz closure disrupted oil supply flows. CIL consumed approximately 4.19 lakh kilolitres of diesel during FY26, making fuel one of its largest operational cost lines. Importantly, CIL is not only absorbing the diesel price increase for its own operations but is also compensating the contractors operating in its mines who purchase industrial diesel in bulk — a decision that protects the entire mining contractor ecosystem from the cost shock and keeps production continuity intact.
The strategic logic of absorption rather than pass-through is clear. Coal remains the backbone of India’s power generation. Any increase in coal prices at the mine gate level would flow through to electricity generators, then to the power grid, and ultimately to electricity tariffs paid by households, factories, and commercial establishments across the country. At a moment when retail inflation is already under pressure from elevated global energy costs and rupee weakness — the rupee hit a record low of 95 per dollar earlier in 2026 — a coal price increase would compound inflationary pressures across the economy with a multiplier effect that the government has clearly decided to avoid.
CIL has gone further than simple cost absorption. Several of its subsidiaries have reduced the reserve price of coal in the Single Window Mode Agnostic e-auction, and the company has simultaneously increased both the frequency of auctions and the volume of coal made available for auction, ensuring that affordable coal supply is accessible across buyer categories at a time of peak demand pressure. The combination of absorbed input costs, reduced auction reserve prices, and increased auction frequency represents a comprehensive supply-side intervention designed to keep domestic coal affordable and available regardless of what global energy markets are doing.
The Iran war context for this disclosure is direct and material. The Strait of Hormuz crisis has pushed up the prices of oil, natural gas, petrochemicals, and fertilizer-linked commodities simultaneously — and ammonium nitrate sits at the intersection of the energy and fertilizer supply chains, explaining why its price has moved so sharply in the weeks since February 28. CIL’s absorption of that shock is a downstream consequence of a conflict that began 6,000 kilometres from its mines in Jharkhand, Odisha, Chhattisgarh, and Madhya Pradesh.
Disclaimer: This article is based on official CIL regulatory disclosures and press releases filed with BSE and NSE on April 10, 2026. Business Upturn is not responsible for any investment decisions made based on this article.