Interesting ramifications. How will Coal India deter competition? By cutting prices of course. But will it be allowed to? It’s a PSU, remember?
If it does cut prices to deter competition, there may be a case for other coal miners to complain against Coal India for anti-competitive practices. After all, Coal India has a huge advantage over others as the article points out: It paying nothing for the mines.
But it suffers from a huge disadvantage too: high labour costs thanks to a bloated workforce and above-market wages.
If Coal India does cut prices, it’s margins will come under pressure. And earning power and dividend paying capacity will because it’s finding it hard to increase production. And the stock may turn out to be superficially cheap. (Disclosure: No position).
Will private bidders enter the fray unless they had clarity on pricing? Let’s wait and see what happens. My current view is that they will enter.
If they do enter and India increases coal production, then it will stand out because in many countries (though not all) coal is going away. Just look at UK. 
And then we also have to think about increased pollution and its consequences on the health of Indians.
Indian government does not see coal as a dirty fuel like governments in a large number of other countries which are paying a lot of attention to pollution caused by coal. Producing cheap energy is reckoned to be more important than dealing with pollution caused by burning coal.
So many dimensions to think about. But one thing is clear: if coal production is going to rise, it will be good news for businesses which have coal miners as customers.
