Coal news and updates

Coal India plans to reach this year's target of 507 million tonnes and 715 million tonnes by 2016-17 but continues to face serious hurdles from our own Environment Ministry and state governments

 

Against the target of 482 million tonnes, the coal production in India actually reached only 463 million tonnes last year and the loss was attributed to the cyclone Phaline and the monsoon flooding. However, the Indian government has simply increased the target for 2014-15 to reach 507 million tonnes. Most people associated with the coal industry say that the progress has been hampered by land acquisition problems and dealing with environmental clearances and so, the chances of reaching this target of 507 million tonnes are remote. Apart from cyclone, Coal Indian Ltd (CIL), the largest producer, has also lost about 3 million tonnes due to illegal mining by Maoist rebels, valued at about Rs600 crore, from its subsidiary Central Coalfields. It is rather sad and strange that such a large scale activity has gone unchecked!

 

The government has taken the extraordinary step of ensuring that Coal India signs up Fuel Supply Agreements (FSAs) with power companies to supply coal without adequate arrangements for mining the coal required to meet this demand. Signing agreements (FSAs) may simply prove to be paper agreements without any consequence!

 

And the most important factor is that the power distribution companies have shown little or no interest to buy electricity which is over Rs3 per unit. From the press report, it appears that there are so many power companies, whose total generating capacity is over 27,000 MW that is actually lying idle because the unit cost of power will be more than Rs3 if they had to depend upon guaranteed supplies that would come from high cost imported coal! It is needless to point out that the indigenous supply is not forthcoming which necessitates such imports. It is a vicious circle.

 

Indonesia, our main supplier, exports 380 million tonnes of coal per year or almost 33% of which comes to India. Price of coal, internationally, has been going down due to poor off take by China and currently ranging between $80 and $90 per tonne. This scenario is likely to continue this year. Domestic prices are much cheaper, but supplies are not adequate.

 

As we have said before, Coal India's plans to reach this year's target of 507 million tonnes and 715 million tonnes by 2016-17 face serious hurdles from our own MOEF and state governments. Unfortunately, on environmental matters, a uniform policy may not be practical, as each case has to be dealt on its own merits and bearing in mind the local conditions!

 

Naturally, Coal India, flushed with huge reserves, has been scouting to obtain overseas assets, two of which has been secured in Mozambique. Now, the Canadian High Commissioner, Stewart Beck, has shown interest in discussing the prospect of CIL investing in British Columbia, when he met N Kumar, Director (Technical). Though British Columbia has high quality metallurgical coal, it has also thermal coal reserves to offer. It may be borne in mind that it would probably take 5-7 years for a mine to be fully operational.

 

In the meantime, Coal India had also toyed with the idea of a joint venture with Shipping Corporation of India to have ships to carry its coal from various destinations, particularly Indonesia, to start with, and later on, probably from Mozambique. This has been shelved due to high cost of imported coal and lack of interest by consumers in the country. Likewise, they had also thought of reviving the Talcher unit of Fertilizer Corporation of India by investing about Rs8,000 crores.

 

All said and done, what Coal India has not done so far, is the invitation being extended to selected top coal miners in UK, Australia, Poland and the US to come and invest in India, in joint ventures to develop our own coal mines, with their advanced technology, machinery and technically qualified manpower at senior levels, who could mentor Indian personnel to take over, at the end of the contract terms.

 

The new government has to consider all these matters in national interest to increase domestic production so as to make supplies available and bring down the unit cost of electric power.

 

 

Source: http://www.moneylife.in/