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Capitalising on India’s Coal Assets 
By Partha S Bhattacharyya, Chairman, Coal India Limited

With high rates of economic growth and over 15 percent of the world’s population, India has become a significant consumer of energy resources. The global financial crisis and credit crunch have slowed India’s economic growth particularly in the manufacturing sector, and GDP growth rates have also declined from 9.3 percent in 2007 to 7.1 percent in the fiscal ended March 31. Despite a recent slowing economy, India’s energy demand continues to increase. The country’s ability to secure a reliable supply of energy resources in a sustainable manner and at affordable prices will be one of the most important factors in shaping its future growth prospects.

Coal Matters
Coal accounts for more than half of India’s total energy consumption followed by oil, which comprises 31 percent of total energy consumption. Natural gas and hydroelectric power account for 8 and 6 percent of consumption, respectively. Although nuclear power comprises a very small percentage of total energy consumption at this time, it is expected to rise pursuant to the international civil nuclear energy cooperation deals. The economy depends significantly on the pace of growth in mining of coal and other minerals to sustain a growth rate of 8 to 10% over the next 25 years. Growth in coal mining at more than 9% per annum in the mid-term for the next 5 to 6 years as compared to a modest rate of 5.4% achieved in the preceding five years is necessary to sustain the growth of the economy in general and to meet the anticipated demand arising from the addition to coal based thermal power energy generation capacity by more than 60,000 MW by 2012.

Any industry prospers as long as it fulfils the requirements of acceptance, survival and growth. On these criteria, Indian coal industry mainly in the public sector has a crucial role to remain capable of facing the emerging issues and challenges. Globally, coal accounts for 28.6% of the primary energy consumption but In India, it has a share of 51.4%. (2007). In respect of generation of power, the share of coal on global basis is 36% and in Indian context, it is as high as 69%. The dominant position of coal in energy consumption and electricity generation in India is likely to continue for decades because of comparatively comfortable proven reserves position of coal vis-à-vis the increasingly depleting reserves of oil and natural gas. It is evident that there will be no dearth of market for coal and if coal could be produced at reasonable cost on a sustainable basis, Coal Industry in India should continue its dominance as the primary source of energy for most part of 21st century.

Energy Roadmaps and Strategic Relevance of Coal India
The Integrated Energy Policy (IEP) document provides a roadmap for meeting the energy needs over the period till 2031-32. Expectedly, it envisages a major role for coal reinforcing the earlier findings of the High Powered Fuel Policy committee set up in the seventies. The coal demand as projected in the IEP document is expected to rise at an accelerated pace and in 2031-32 be within the range of 1600 million ton (least coal consumption strategy) or 2600 million ton (continuing the present trend). As compared to current consumption of 460 million ton per annum, this represents a CAGR of 5.11 to 7.17%. A CAGR of 6.05% shall be required to support coal consumption @ 2000 mtpa in 2031-32.
The Working Group on Coal Lignite in its report in Nov 06 has projected coal demand in the terminal years of XI and XII Five Year Plans i.e. 2011-12 and 2016-17 of around 731 and 1121 million ton in the respective years. The corresponding coal production is assessed at 680 million ton and 1051 million ton respectively. Out of the above, the share of Coal India Limited (CIL) is expected to be of the order of 521 (77%) million ton and 665 (63%) million ton respectively. Considering the fact that the highest rise achieved by CIL in any Plan period (X Plan) so far is around 81 million ton, the increase in coal production during XI Plan (160 million ton) and XII Plan (144 million ton) are major quantum jumps.

CIL meets 46 per cent of the nation's primary commercial energy and contributes to 82 per cent of the nation's overall coal output. CIL offers coal at a deeply discounted price compared to International prices. This enhances Global competitiveness of end users. The benefit is generated without creating any burden on Government or on the company. In its endeavour to meet the growth target, CIL has plans to take up 134 coal projects with an ultimate capacity of 309 million ton per year (Mty) during XI Plan period with an investment of over Rs 26,000 Crores (US$ 5.5 billion). The share of Underground (UG) projects in the new capacity is about 23.39 Mty and for Opencast (OC) projects it is 285.55 Mty.

Underground Mining Initiatives
Production of coal from UG mines have been declining persistently. From a level of 65 Mty in mid seventies, it declined to 43 Mty in 2006-07. It was recognized then that to sustain the reserves for longer period of time, CIL needs to refocus on UG production for tapping large reserves below 300 metres depth. In a paradigm shift, keeping with the recent global trend, Coal India has initiated measures to develop large underground mines by adopting state-of–the–art mass production technology. Besides, High Wall Mining is being introduced. About 20 High Wall Mining Machines are expected to be introduced in next 4 to 5 years. The trend of decline in the existing UG mines has been arrested since 2007-08 and a marginal growth achieved in 2008-09.

CIL has identified seven high capacity underground mining blocks of 2-5 Mty capacity for development and operation on a long- term contract basis by Internationally acclaimed and proven mine developers & operators. It also intends to re-open 18 closed/abandoned mines with a cumulative reserve of 1647 Mt for extraction of residual coal which have either been closed or mining operations suspended on account of safety and techno-economic considerations. These mines are proposed for Joint Venture participation by Internationally reputed mining companies having technical know-how for safe extraction of residual coal.

Washing Scenario
India has the world’s third-largest hard coal reserves, after the United States and China. Indian coal is generally low in sulphur but high in ash and low in calorific value. Domestic coking coal requires intensive washing to make it suitable for coke-making. Even then, it is only marginally acceptable because of its inert material content. For this reason India imports much of its coking coal. Domestic steam coal is generally more suitable, but without beneficiation its high ash content can reduce boiler efficiency and reliability and hamper efforts to reduce emissions. The high inert content of untreated coal also imposes an extra load on the transport system.

CIL has taken a policy decision to supply washed non-coking coal to all consumers other than the pit head consumers. Steps have already been taken to set up 19 Coal Washeries within next three years for a total capacity of about 105.6 Mty (primarily non-coking coal). These washeries will be built up, commissioned, operated and maintained by Private Operators selected through Global Bidding process. Coal India will provide fund and infrastructure facilities like land, power, water, Railway siding.

Clean Coal Solutions
CIL is fully conscious of the environmental concerns and has come forward with some clean coal initiatives. In a capacity building exercise CBM facilities have been introduced in Jharia coalfield where the gas is being utilized to generate power for distribution in the township. A CMM initiative in the same area is on the anvil. Besides, AMM and VAM utilization projects are under consideration. CIL has also expressed its intention to participate in FUTUREGEN, the zero emission power plant being taken up by USA. CIL is also considering UCG and SCG opportunities to open up the possibility of utilizing coal without mining it – a clean coal solution. Also the emphasis laid on washing of coal shall go a long way in reducing the environmental effects of coal transportation and usage.

Initiatives Abroad
The demand for coal is likely to increase in the coming days and to bridge the yawning gap between demand and supply, CIL is looking at coal mines abroad in countries like Mozambique, Indonesia and Australia. CIL is one of the five stakeholders (the others being SAIL, RINL, NMDC and NTPC) of International Coal Ventures Limited (ICVL) that is constantly working to identify and acquire overseas coal properties. Coupled with this effort, Coal Videsh Division – the Foreign Venture Arm of CIL was set up with the objective of exploring, developing and managing coal mines overseas and export the produces to the country. Through this venture, CIL also envisages to imbibe “Transnational” competence in coal business and transform itself into a global energy company. In a recent development, CIL was successful in bagging two virgin coal blocks in Mozambique through competitive bidding. The two coal blocks A1 and A2 span an area of about 205 Sq. Kms with an estimated reserves upto 1 billion ton. Explorations on the blocks are likely to commence soon.

Sustainability Issues
The quantum jump in opencast mining activities has brought the environmental impact of mining under scanner. In order to promote transparency in environmental sustainability, Central Mine Planning and Design Institute (CMPDI) - an in house consultancy arm of CIL, is undertaking the satellite surveillance of all opencast projects of five million cum capacity and more, which will track reclamation and renovation activities and monitor the restoration, made to the original habitat. The satellite images will be uploaded on the website. We are not judging performance of the subsidiary companies only on the basis of quantity of coal produced but also on land reclaimed and restored both physically as well as biologically.

Coal mining is site specific and has to be done where it occurs. For this, vast amount of land is required which is the basic raw material for any coal mining company. Delay in acquisition of land is one of the major issues which leads to time and cost over run of coal projects. Talks are going on at various levels to reduce the time delay in getting the final clearance and also to delineate forest land into ‘Go’ and ‘No Go’ to enable coal companies to ascertain the area available for non-forest use.

Such activities bring with it the social sustainability issues, the issues of resettlement of communities due to mining or underground fires/subsidence. We have already made some model townships for PAPs (Project Affected People) and also have modified the R&R Policy not only to make it more attractive and acceptable to land losers but also to adopt a more inclusive approach by making them a major stake holder in the development process. As one of the steps in this direction, CIL proposes vesting ownership rights to land losers through issue of its shares once it is listed on the bourses. In one of the biggest rehabilitation plans in the world, the Government recently cleared the Rs 9773 crore (US$ 2 billion) rehabilitation plan drawn by CMPDIL to relocate some 120 thousand families to safer areas whose houses face the threat of being sucked in by underground fires raging for the last ninety years or so in the vast stretches of Jharia Coalfields and land subsidence in Raniganj Coalfields. The plan shall be largely funded by CIL from its accruals supplemented by levy of additional duty. 

Inspite of various policy initiatives to diversify the fuel mix, the limited reserve of petroleum & natural gas, eco-conservation restriction on hydel projects and limited scope of renewable and nuclear energy, compels coal to continue hold the centre-stage of India's energy scenario. The coal industry in the country is gearing up to meet the new challenges and shall continue to provide energy security to the country in the years to come.

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   RNI No. WBENG/2008/27737
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