More Stories

Informist, Wednesday, Aug 21, 2024

 

By Avishek Rakshit

 

KOLKATA – Coal India Ltd is set to award more closed underground mines to private players on a revenue-sharing basis, and come up with relaxations in bidding norms that it hopes will boost coal production, Chairman and Managing Director P.M. Prasad said today.

 

"A total of 24 such mines have been awarded so far out of 34 identified mines. Your company is also identifying a few more mines for the purpose to attract wider participation with relaxed bid norms," Prasad told shareholders at the company's 50th annual general meeting.

 

Prasad said the mines had been awarded to private companies on a revenue-sharing basis, with Coal India having a minimum 4% claim on the revenue from these mines. The cumulative peak rated capacity of these underground mines is 17.9 mln tn, while the total extractable reserves are estimated at 267.5 mln tn.

 

These underground mines, which are owned by Coal India, are offered to private miners under a tender in which the bidder offering the highest revenue share to Coal India, besides meeting other norms, bags the tender. The entire mining equipment and mining costs are borne by the bidder and Coal India only provides the land and existing infrastructure in the mines, and arranges for regulatory clearances.

 

In the past, bidders have drawn Coal India's attention to some provisions in the tenders that hinder wider participation. Prasad today said Coal India would relax some of the bidding norms in the tenders, but did not elaborate further.

 

The company's plans are part of the government's aim to increase the share of coal produced from underground mines to about 100 mln tn by 2027-28 (Apr-Mar). The coal ministry is also auctioning underground mines to the private sector to boost production, targeting at least 10% of total coal production from underground mines by 2030.

 

As of Mar 31, Coal India had a total of 313 mines, of which 131 were underground, 168 opencast, and the rest mixed. Most of the underground mines are in the country's eastern and western regions, namely West Bengal, Jharkhand, and Maharashtra. However, the share of underground mines to the total production was a dismal 3.4%.

 

In the year ended March, Coal India arrested the fall in production from underground mines after 14 years of decline, Prasad said. Total production from underground mines was at a little over 26 mln tn, growing over 2% year-on-year.

 

For the past decades, Coal India had closed most of its underground mines, as the company claimed these were no longer financially viable and the world's largest coal miner lacked the technology to mine the commodity from underground mines. Usually, the cost of mining from underground mines is higher compared to opencast mines.

 

Coal India usually identifies unviable coal mines based on cost-benefit analysis, balance mineable reserves, and technical assessments, including safety, geo-mining conditions and environmental concerns. Based on these factors, the company suspended operations at most of its underground mines.

 

Coal from opencast mines is extracted through the blasting method in which a large area is displaced to take the coal out using explosives and other machines. In underground mines, however, the coal needs to be excavated through large holes in the mine surface area and, therefore, the surface area displacement is minimal. Underground mining is ecologically friendlier compared to opencast mines and the quality of coal from underground mines is far superior compared to opencast mines.

 

Before the commencement of the company's annual general meeting, a Coal India official told Informist that underground mining initiatives represented a strategic shift towards more sustainable and less environmentally-intrusive mining practices. "By increasing underground coal production, Coal India can enhance operational efficiency and reduce surface mining impacts, aligning with global sustainability trends and help the government meet its sustainability goals," the official had said.

 

Prasad said Coal India was also working on expanding its sand business. The company has developed technology to extract sand and its alternatives from the topsoil it removes to expose coal seams. Four such plants, which convert the topsoil, or overburden as it is called in the mining industry, to sand, have already been commissioned. Prasad said Coal India was working on commissioning more such sand plants across its major subsidiaries.

 

Overburden is also used for other purposes such as road construction, construction of railway siding, and civil works. In the last financial year, Coal India earned revenue of 148 mln rupees by selling this topsoil and sand.

 

At 1233 IST, shares of Coal India were up 1% at 530.15 rupees on the National Stock Exchange. End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.