Coal India’s production rises 9.9% in Apr-Sept

Public sector coal producer Coal India (CIL) has reported an output of 184.4 million tonnes in the first half of the current fiscal, an increase of 9.9 per cent compared to the year ago period. CIL had produced 167.8 million tonnes in April-September last year.

This was stated by Minister of State for Coal, Statistics and Programme Implementation Sriprakash Jaiswal after a review of the performance of Coal India Ltd (CIL) and its subsidiaries—Eastern Coalfields Ltd (ECL), Bharat Coking Coal Co Ltd (BCCL), Central Coalfields Ltd (CCL), Mahanadi Coalfields Ltd (MCL), Northern Coalfields Ltd (NCL), Western Coalfields Ltd (WCL), South Eastern Coalfields Ltd (SECL) and Central Mine Planning & Design Institute Ltd (CMPDIL).

Amongst the Coal producing subsidiaries, NCL, SECL, BCCL, ECL and WCL have not only achieved the targets but have also exceeded the targeted growth rate set for the first half. NCL has achieved production of 30.54 million tonne as against target of 29.89 million tonne. It has also achieved an absolute growth of 2.54 million tonne thus achieving growth rate of 9.1 per cent over the same period last year.

Similarly, SECL has achieved production of 48.43 million tonne against targeted production of 47.47 million tonne. It has also achieved an absolute growth of 2.06 million tonne over last year, thus achieving 4.4 per cent growth rate over the same period last year.

BCCL has achieved coal production of 11.99 million tonne against target of 11.86 million tonne. It has achieved an absolute growth of 1.80 million tonne thus achieving the growth of 17.6 per cent over the same period last year.

ECL has achieved production of 12.42 million tonne as against target of 12.09 million tonne. It has also achieved an absolute growth of 0.99 million tonne thus achieving 8.6 per cent over the same period last year.

WCL has achieved production of 21.16 million tonne as against target of 20.30 million tonne. It has also achieved an absolute growth of 0.81 million tonne thus achieving 4.0 per cent growth rate.

Two of the subsidiaries of Coal India, CCL and MCL have not achieved the targeted production during the first half. However, these two companies have registered a growth rate of 25.1 per cent and 13.2 per cent respectively over the same period last year. CCL has achieved production of 17.57 million tonne as against target of 20.16 million tonne. It has achieved an absolute growth of 3.52 million tonne thus achieving a growth rate of 25.1 per cent over the same period last year.

Meanwhile, MCL has achieved production of 42.03 million tonne as against target of 49.23 MT. It has also achieved an absolute growth of 4.90 million tonne which comes to achieving growth rate of 13.2 per cent over the same period last year.

Off-take during the first half of this year has been 194.3 million tonnes which shows an increase of 8.1 million tonnes over the previous year’s achievement of 186.2 million tonnes, thus showing a growth of 4.3 per cent.

Despatch to power utilities during the year has been 140 million tonnes, 2 millions tonnes more (1.6 per cent growth) than the same period of the last year. The despatch could have been more but for deteriorating law and order situation at CCL and inadequate availability of wagon, particularly at Talcher Field of MCL.

In fact, during July and August, MCL received much less wagon at Talcher field in comparison to indents. Thus, in spite of having sufficient coal stock at pitheads, the constraints in logistics infrastructure affected desired growth in off-take.

Government’s Nod

Coal India is eagerly waiting for the Governments mining approval to increase its production. Actually in the 11th five year plan, the company’s annual growth target is 7.6 percent. Their target is to increase production up to 520.5 million tones in the terminal year of the 11th five year plan, i.e., 2011-2012. But world’s biggest coal producer wants to increase its production by 10 per cent. The increase in production could meet the shortfall and the ever increasing demand from the power generating companies and reduce the dependence on imports. As a result from the growing demands from the power generating companies and shortfall in domestic production government has to import 10 to 15 percent more coal.

Coal India chairman Partha S Bhattacharya recently said, faster consent from the government will allow the company to increase output by 10 per cent, above its target of 7.5 per cent from a current production of 404 million tonnes a year.

Recently minister of state of coal Sriprakash Jaiswal said, “Coal India will increase the indigenous production of the fuel to meet the demand. The government has envisaged new mining projects with additional capacity of around 310 million tonnes during the current XIth Five-Year Plan (2007-12).”

CIL is taking various steps like improvement in equipment utilisation, timely implementation of projects, improvement in productivity both in underground and opencast mines to increase coal mining capacity. It is also planning new mines with mechanization and introduction of mass production technology in the underground mines.

But the problem is elsewhere. Bhattacharya has said correctly, “Coal in India is found in forests and places that are inhabited by tribes. Mining disturbs both.” That is the major problem. That is why Environment Ministry usually takes a long time to approve it. Sometimes it takes several years to give the clearance. Now-a-days several groups are really active to protect the environment and the rights of the tribal people of India. That is why Coal India has taken a three-pronged strategy namely, more stress on underground mining, restart mining in the abandoned sites, where there is a substantial reserve and more import.”
Coal India is importing 4 million tonnes of coal this year. Power generating companies are also importing a large quantity of coal.
As Jaiswal said, “Coal imports are planned by Power Sector every year in advance, keeping in view its requirement and Coal India is also contemplating to import the dry fuel.”

NTPC Ltd, the country’s biggest electricity generator, plans to import 12.5 million tonnes. Both state-owned companies are also scouting for overseas mines. Private power companies are looking for foreign mines. In 2007, Tata Power Co, which is building a 4,000-megawatt plant in western India, bought a 30 per cent stake in two coal mining units owned by Indonesia’s PT Bumi Resources, Asia’s third-largest coal miner. The $4.14 billion plant will run on coal from the Indonesian mines. According to an estimate, country’s coal imports will more than double to 100 million tonnes by 2012 from 40 million tonnes.

More or less every major state is facing huge power shortage. During summer months, Delhi experienced a power cut of four to eight hours. Same is the case of Maharashtra, rural Bengal, Madhya Pradash, UP and other states. So Central and State Governments are trying hard to increase the power production in near future to a great extent to meet the challenge.

President Pratibha Patil in her speech in the Parliament stressed the need for more power. More power production means requirement of coal will increase. Because most of our power plants are coal based. So CIL has no other option but to increase the production.
But there is another major problem also. General estimate tells us that, India has a coal reserve which will last for another hundred years. But some ministry officials are of the opinion that, India is likely to run out of its 60-70 billion tonnes of coal reserves by 2040-41 if the demand continues to grow at the present pace. The demand for coal will reach two billion tonnes mark by 2016-17. We need to grow at the rate of 17-18 per cent from the present 6-7 per cent to meet this growing demand.

We need to employ new mining technologies to go deeper to explore the untapped resources, otherwise by 2040-41 our present coal blocks will run out of reserves due to the growing demand from consuming industries. The demand (for coal) by power sector for 2011-12 has been pegged at around 730 million tonnes but the production target for the 11th Five Year Plan is at around 680 million tonnes.

Coal In India—Some Facts
  • India is the third largest producer of coal in the world.

  • Coal is one of the primary sources of energy, accounting for about 67% of the total energy consumption in the country.
  • India has the fourth largest reserves of coal in the world (Approximately 197 billion tonnes.)

  • Coal deposits in India occur mostly in thick seams and at shallow depths. Non cooking coal reserves aggregate 172.1 billion tonnes (85 per cent) while coking coal reserves are 29.8 billion tonnes (the remaining 15 per cent).

  • Indian coal has high ash content (15-45%) and low calorific value.

  • With the present rate of around 0.8 million tons average daily coal extraction in the country, the reserves are likely to last over a 100 years.

  • The energy derived from coal in India is about twice that of energy derived from oil, as against the world, where energy derived from coal is about 30 per cent lower than energy derived from oil.

China India
Recoverable Coal Reserves
126,214.7 million short tonnes
101,903.2 million short tonnes
Coal Production
2,156.4 million short tonnes
403.1 million short tonnes
Coal Consumption
2,062.4 million short tonnes
430.6 million short tonnes

In this situation Coal India plans to revive old mines to meet power plant demand for the fuel. The company has already identified 18 old underground mines with total reserves of 1.6 billion tonnes to increase output. These mines were abandoned by Coal India because of difficulties such as water-logging and fire. Coal India short-listed Arcelor-Mittal, the world’s biggest steelmaker, and nine other companies to develop its abandoned mines.

In the meantime, CIL aims to conclude a deal to buy an overseas mine by March and plans to float its first-ever coal import tender in November to meet surging demand from power sector, company officials said.

While India has the world’s fourth-largest coal reserves, its coal imports have grown rapidly as Asia’s third-largest power producer seeks to add power capacities to end blackouts.

Coal India aims to debut as a coal importer in November by issuing a tender for 4 million tonnes, with shipments to arrive from January, technical director NC Jha told reporters at an industry conference. Jha said the firm aimed to increase coal output by nearly 8 percent to 435 million tonnes in 2009/10 (April-March).

He said India was likely to import a total of 60 million tonnes of coal in 2009/10, up from 57 million tonnes last year. India’s biggest coal miner has plans to partner with global players to buy stakes in overseas coal mines.

Bhattacharyya hopes to conclude an overseas acquisition deal this fiscal ending March. “Something will happen this (fiscal) year,” he said without elaborating further.

In July, Coal India had sought bids from global players to form strategic partnership for jointly acquiring coal assets in Australia, US, South Africa and Indonesia.

Coal India was looking at 45 out of 52 responses, he said, adding the firm’s agenda was to bring back coal to India at a price that better than import prices.

Bhattacharyya said 10 firms, including steel major ArcelorMittal (ISPA.AS), were keen to develop its 18 abandoned coal mines in eastern India, which have reserves of 1.6 billion tonnes.

“We hope to sign a contract for one or two of these blocks this (fiscal) year so that production can come from 2013/14,” he added.

The share of coal-fired plants in India’s total installed power generation capacity will rise to 57 percent by March 2012 from the current 53.3 per cent, a PricewaterhouseCoopers report said.
Incidentally, CIL’s effort to take over the ailing Durgapur-based Mining and Allied Machineries Corporation (MAMC) is yet to fructify. The proposal was taken up to start manufacturing underground mining equipment at the plant since there are no established makers as on date.

Once, MAMC’s debts are waived by the Centre, CIL and its partners, including Damodar Valley Corporation (DVC), will be able to manufacture open cast mining equipment, too.

“It will help substitute imported equipment for both open cast as well as underground mines. However, we are still waiting for the government’s clearance,” said NC Jha, director-technical at CIL.
“Since MAMC is a BIFR case, the joint takeover proposal by BEML, CIL and DVC to take over the firm will now have to be passed by the high court, following which needs to be cleared by the Cabinet. BEML intends to take 48 per cent in the company, while CIL and DVC will take 26 per cent each,” said a CIL official.

Incidentally, MAMC owed the West Bengal government about Rs 100 crore, which has already been waived. Central dues stand at about Rs 1,200 crore, and will require a Cabinet clearance.

Thermal import

Coal India will import four million tonnes of thermal coal to meet the requirement of public sector power producer NTPC.
“CIL is going to import 4 million tonnes of thermal coal for NTPC this fiscal. Tender will be floated in November and we expect the coal supply in January next year,” NC Jha, director-technical.
He said that the total coal import requirement of the power sector in this fiscal is 22 million tonnes. The country’s total coal import in this fiscal is going to be around 60 million tonnes compared to 57 million tonnes in the last fiscal, he said.

About CIL’s coal production, he said it has produced 189 million tonnes of coal in the first half out of a target of 435 million tonnes this fiscal.

“The remaining production target will be met in the second half as normally 65 per cent of the total target is met during the second half,” he added.

Meanwhile, in a major shift from its policy to equip the state-run and private power utilities with captive coal blocks to meet their production needs, the Coal Ministry is now actively considering allocating nearly 130 blocks to its behemoth Coal India. It believes that if the blocks are not given to the state-run giant, then it will not be able to achieve a production target of 520 million tonnes by 2020.

“CIL intends to produce 520 million tonnes of coal by 2020 but it does not have adequate blocks to achieve that as many of them have already been allocated to the state-run as well as private power and steel utilities for captive use to meet their growing energy needs. So we are planning to allocate 130 blocks having estimated coal reserves of nearly 38 billion tonnes to it in the near future,” a coal ministry official said.

The PSU seems to have told the ministry that its production will begin to fall from 20 15-16 if adequate coal reserves are not entrusted to it to meet the nation’s growing energy needs as well as to reduce its import dependence. As of now, CIL has 170-180 blocks under its fold.

“CIL argues that is imperative to have these blocks under its fold to maintain its operational viability, even as it is mulling to import 4 million tonnes of coal for the current fiscal for the power sector. The ministry fully endorses CIL’s contention as it believes that the PSU remains the primary source of coal for both core and non-core sectors,” the official pointed out.

“We find that CIL now has both financial resources and technical wherewithal to go in for massive mining and up their production during the 11th Plan period. They have planned to invest about Rs 20,000 crore to intensify their capacity-expansion and conduct fresh exploration. There is a clear case for allocating additional coal blocks to it to enable the PSU to meet the soaring needs of the power sector,” the official reasoned.

What has led the Coal Ministry to decide in favour of CIL is that some of the existing allottees have been found idling on their blocks despite years having elapsed. According to information available, of the 210 blocks allocated till March 31 this year having reserves of 45 billion tonnes, just over a dozen have reached the desired production levels. The rest —some of which were allotted as far back as 1998—have either not secured environmental clearances or have not submitted acceptable mining plans to the government.

The demand (for coal) by the power sector for 2011-12 has been pegged at around 730 million tonnes but the production target for the 11th Five Year Plan is at around 680 million tonnes. A total of 172 coal blocks with reserves of 38 billion tonnes have so far been allotted to various private and public sector companies.

CMPDIL Expansion

The Central Mine Planning and Design Institute (CMPDIL), a subsidiary of Coal India, will invest over Rs 100 crore for acquiring advanced drilling equipment in the next two years. With this the mini-ratna aims to increase its annual exploration capacity to 10 lakh meters by 2010 from the present 2 lakh metres.

“We have lined up an investment of Rs 108 crore for acquiring 18 new generation hydrostatic rigs from Sweden to replace old manual rigs. We have already received two such advanced machines,” CMPDI CMD AK Singh said.

The coal ministry has got customs duty on import of such equipment reduced to 3 per cent from 7-10 per cent earlier.
The investments are in line with the Coal India’s strategy to prove about 161 billion tonnes of coal reserves out of the estimated reserves of 267 billion tonnes in the country. CIL targets to mine about 435 million tonnes of coal in the current fiscal.

“CMPDIL is planning a major revamp of its exploration activity. We plan to enhance annual drilling capacity to one million meters per annum,” CIL Chairman told reporters.

The company does exploration up to 300 metres and is planning to take it up to 600 meters, he added.

Also on cards are introduction of the latest exploration technologies for more efficient reserve estimation. To meet the manpower requirement for enhanced drilling capacity CMPDIL is training 100 more geologist and 200 drilling staff, Singh said.

“CIL has transferred its 100 geologists and 200 drilling persons to CMPDIL and we are training them to meet the extended drilling capacity,” he added.

The present manpower strength of the subsidiary, which is also the centre's nodal research and development wing for the coal sector is 3,173.

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