Indian Coal Industry- Past, Present and Future

<p style="text-align: justify;">Coal is the World's most abundant, secure, cost effective and safe fossil fuel and, so, is true for India too. Nature has blessed our country with large reserves of coal. As on 31 March 2019, India had 326.49 billion metric tons of the resource.</p><p style="text-align: justify;">Coal Mining in India started in the year 1774. It continued to be predominantly manual till Late 60s of 20<sup>th</sup> Century. Nationalization was done during 1971-1973 for achieving developmental and socialistic objective.</p><p style="text-align: justify;">In Nov 1975 Coal India Limited (CIL), a holding company, under the Ministry of coal was set up. In 1993, due to demand supply gap, Captive mining was allowed for Power, steel and cement sectors by way of enactments and amendments to the Nationalisation acts. The MMDR Amendment Act. 2010 was enacted making the system of competitive bidding applicable to all minerals covered under the said Act. Ministry of Coal notified the Auction by Competitive bidding of Coal Mines, Rules 2012. However, Auction was not the call of the day.</p><p style="text-align: justify;">&nbsp;In 2012, the CAG published its report on allotments of coal mines.&nbsp; Pursuant to these in 2014, the Supreme Court held that all allotments of coal blocks made during 1993 to 2010 (except few) were illegal and cancelled them collectively.</p><p style="text-align: justify;">In the aftermath of the Supreme Court Judgement, the Coal Mines (Special Provisions) Act, 2015 (CMSPA) was enacted to deal with the cancelled blocks. The CMSPA amended the Nationalisation Act and the MMDRA. The CMSPA is a forward-looking enactment and paved the way to allow greater private participation and end the monopoly of Coal India.</p><p style="text-align: justify;">The Govt. of India approved the methodology for auction of coal mines under the CMSPA in 2018 (2018 Order). The 2018 Order provided for commercial coal mining for private sector with no restriction on the sale and/or utilization of coal from the coal mine. FDI rules were also suitably amended. Auctioning of coal blocks for Commercial Mining has already started.</p><p style="text-align: justify;">India is the third largest coal producer in the world after China and the US. The total coal production in India was around 729 million tonnes (MT) in FY 2019-20, Ninety per cent of the domestic production comes from public sector coal producers while only 10% is produced by the private sector. India imported a total of 248 MT of coal in FY 2019-20, which is equivalent to one-third of the domestic coal consumption in the country based on tonnage.</p><p style="text-align: justify;">Mining depths in Indian coalfields are quite shallow, barring a few mines in Jharia and Raniganj coalfields. Major share of coal resources lies at a depth of less than 300 metres. About 87 percent of coal resources lie within the depth range of 600 metres. However, in most of the coalfields, exploration work beyond 600 metres depth is yet to be taken up. It is expected that the resource figures will improve considerably, with increased depth of exploration.</p><p style="text-align: justify;">Deposit characteristics vary widely from coalfield to coalfield. In some areas like Jharia and Raniganj coalfields, high concentration of super imposed seams (as much as 40 in number) pose great challenge to mining operations. Presence of a large number of thick seams, though a blessing for open cast mining, is again a major underground mining problem. Reserves in steeply inclined seams are, however, only marginal.</p><p style="text-align: justify;">Geological inconsistencies like faults, folds, washouts etc, common in most of the coalfields, tend to reduce the mining potential of deposits. Intrusions such as dykes and sills often lead to operational problems and quality deterioration.</p><p style="text-align: justify;">Nearly all Indian Coal seams are prone to spontaneous heating. The incubation period varies widely from 2 to 12 months. However, compared to gas emission in other parts of the world, the coal seams in India are less gassy.</p><p style="text-align: justify;">Due to the very nature of deposition, Indian coals, in general, are of inferior quality owing to high ash percentage, when compared with coal available in the international trade arena.</p><p style="text-align: justify;">There is a debate going on the subject of Coal Vs Renewables. But provision of fund and the figures indicating the trend of generation of power from renewable are not very encouraging to suggest that fossil fuel will be elbowed out anytime sooner. It will be difficult to move away from coal because</p><ol style="text-align: justify;"><li>Economic value it adds to the coal bearing states by way of direct and indirect employment</li><li>Abundance of reserve</li><li>Subsidizing of passenger traffic of Indian Railways by Coal freight</li><li>Limitations on Installed and effective capacity of Renewables</li><li>Grid balancing</li></ol><p style="text-align: justify;">However, Regulatory environment will continue to get stricter, increasing the compliance cost.</p><p style="text-align: justify;">It can be safely concluded that coal has a longer life in India than being apprehended in certain quarters. Prospects for the Indian coal mining sector appear more optimistic, despite suffering a small decline in 2020. Coal India Ltd (CIL) produced an estimated 602 Mt in 2019-20, falling short of its target of 650 Mt. But, the Government of India remains committed to the domestic coal industry, with a strategy to reduce imports which currently average 200-240 Mt/y (2015-19), opening up possibilities for domestic coal producers to meet most of the expected increase in demand in coming years. However, the extra tonnage that needs to be transported from the mines to the more distant markets that are served by imported coal will test the rail system which is already operating at its limits.</p><p style="text-align: justify;">Thus, in the post-COVID era, the future holds a combination of opportunities and challenges for the Indian coal sectors.</p>
KR Expert - Tapas Kumar Nag