Companies

Coal India’s road to a billion tonnes

Raghuvir Srinivasan | Updated on January 24, 2018 Published on July 12, 2015

The Bharatpur mine at Talcher, Odisha, owned by CIL’s subsidiary Mahanadi Coalfields Limited. RAGHUVIR SRINIVASAN

That’s the target for the next 5 years, but given the constraints the State-run miner operates under, is this achievable? Or even necessary?

As the SUV bounces down the rutted, slushy path, the bottom of the massive 50-metre deep crater reveals itself as a hive of activity.

Large dumpers spilling coal and earth wheeze their way up to the dumping yard above, surface mining machines monotonously plough away at coal seams leaving loose coal in their wake, hydraulic shovels follow them scooping away the coal and depositing it onto waiting dumpers, and tankers suck out the water from natural springs exposed by the digging and gouging.

We are at the Bharatpur mine of Mahanadi Coalfields Ltd (MCL), a subsidiary of Coal India Ltd, in Talcher, Odisha. The open cast mine produces about 7.5 million tonnes per annum, a medium-size operation in MCL’s portfolio. But if everything goes to plan, the output will zoom to 20 million tonnes in five years.

This mine is representative of the opportunities and challenges for Coal India as the behemoth maharatna scrambles to meet the target of a billion tonnes of output by 2019-20, set by Minister of State for Coal, Power and Renewable Energy, Piyush Goyal.

Ambitious target

Last year, Coal India (CIL) produced 494 million tonnes, 6.88 per cent more than in 2013-14, the best growth rate achieved by the company till now. To meet Goyal’s target, the output has to grow at 15.15 per cent CAGR over the next five years.

Tall order? No, say CIL officials, revealing that they have a clear plan, down to the individual mine level, to achieve this. Challenges on land acquisition and environmental clearances can be managed, they maintain. “We cannot shirk away simply because it appears daunting. We aim to give it our best shot,” says a confident S Bhattacharya, CMD of Coal India.

Not everyone agrees. A former CMD of CIL, Partha Bhattacharyya, is one of the dissenters, saying it’s a tall order.

He thinks better coordination among the ministries of coal, environment and railways and the State governments concerned, coupled with proper management of environmental issues, could at best result in an annual growth of 10 per cent. “You can throw 15 per cent growth to the winds,” he adds. The best case scenario — an 800 million-tonne output in five years.

Evacuation, a worry

But AN Sahay, CMD of the Odisha-based Mahanadi Coalfields Limited (MCL), which contributes a quarter of CIL’s total output, is sanguine. Though a challenge, he says the target is not impossible, quickly adding that the biggest constraint will be evacuation. Sahay should know because production is constrained at two of his major mines — Basundhara and Bharatpur — due to evacuation problems.

The Basundhara field, with total reserves of 6 billion tonnes, now produces a mere 10 million tonnes per annum. Laying a double-line connecting the field to the nearest railway siding at Kanika, 35 km away, can help coal loading zoom to 80-90 million tonnes per annum.

However, the project has been in limbo since 2006. It was to be completed by 2009 but work is gathering pace only now and the Indian Railways expects to complete it in a year. Environmental clearances and land acquisition are the obstacles. Meanwhile, cost estimates have zoomed from ₹456 crore for a single line in 2006 to ₹2,450 crore for a double-line now.

Similarly, in the Bharatpur mine at Talcher, a single village, Nathada, has held up a project to build a loop line that could help coal loading double from 35 million tonnes now to 70 million tonnes. The villagers have been demanding a compensation package similar to what is given to land acquired for coal mining, which is more attractive. MCL is unable to oblige since the land is not coal bearing and will be used to merely lay a linear railway line. The Talcher field sends out 40 rakes of coal daily despite these constraints.

Just sorting out these two projects will help MCL produce and transport an extra 115 million tonnes in five years. Financial problems faced by contractors have held up critical projects too.

One example is the two silos under construction at Bharatpur. These silos, of 5,500 tonnes each, would help increase storage capacity at the mine, besides quicker loading on rakes. A rake of 4000-tonnes capacity can be loaded in 45 minutes using the silos, compared to the several hours it takes manually.

The ₹173-crore project was started in 2010 and should have been completed in 2012. But it is still dragging on with no sign of completion in the near future, thanks to financial problems faced by the contractor McNally Bharat. Meanwhile, stocks are piling up in the open yard; rake-loading is constrained and MCL is forced to go slow on production from the mine.

These are illustrations of the problems at the ground level that need to be tackled before the grand targets set in Delhi can be achieved.

Three ongoing railway projects in Jharkhand, Odisha and Chhattisgarh adding up to about 200 km will ease some of the connectivity constraints. These lines connect the growth areas for mining, from where about 70 per cent of incremental output will emanate. The Eastern Dedicated Freight Corridor, funding for which was cleared by the Cabinet recently, will help relieve congestion in the main lines passing through this high traffic region.

Co-ordinating better

The second dimension to the evacuation problem is the shortage of rakes. CIL has been forced to buy wagons to overcome the shortage from the Railways.

Bhattacharyya feels coordination between the Railways, the Coal Ministry and mines over rake allocation must improve. If the Railways complains that its rakes idle at loading points for want of coal stock, the mines complain that stocks are piling up for want of rakes.

It is not unknown for rakes to be sent to loading points at mines with low stock while coal stocks mount elsewhere. The only solution is better inter- and intra-zonal coordination. Idle rakes, for instance, in the South Eastern Railway can be diverted to the East Coast Railway and vice versa dynamically, based on demand-supply assessment.

To work around the rail constraint, MCL has built a dedicated four-lane road corridor to supply customers within an 80-km radius of its Basundhara mines. Also on the anvil is a 1,600 MW super-critical pit-head plant to overcome the coal evacuation constraint. While these are good alternatives, they cannot substitute for rail transport when production rises to meet the target.

Green management

Mining is inherently a polluting and environmentally damaging activity but the effects can be mitigated to a large extent with technology and commitment. Pollution in this industry happens at three points — production, transportation and consumption when coal is burned at power plants.

At the production stage, there are typically two issues. First, is managing air pollution as fine dust particles rise to the atmosphere. Second: managing the massive craters that result from open cast mining. The issue of dust pollution around mines can be solved simply by using water sprinklers that create a spray of mist and absorb the fine dust allowing it to settle gradually.

Surprisingly, it is difficult to find such sprinklers of good quality in India, according to a CIL official. Sprinklers are rarely used. Those that are, are used to send out jets of water into the air, which does not absorb the dust. Importing sprinklers is not easy given government rules of buying from the lowest bidder — they are more expensive than domestic ones.

CIL also needs to invest in restoration of mine sites by refilling the large craters that are created after the last tonne of coal is excavated. Today, the excavated overburden (earth) form small hills and the craters are converted into water bodies. CIL officials proudly show off “afforestation” on these ‘overburden hills’ — which anyway is a mandatory as otherwise there could be landslides during rains — and point out that the water from these craters can be used for irrigation. But that is not how it should be, an expert says.

In advanced countries, mining companies refill these craters with the overburden and eventually return the land to the local community for whatever they want to do with it. CIL needs to invest in similar strategies; it is an integral cost of mining and cannot be shunned. This will also help CIL win over the local community when the company goes in search of fresh land for mining, says the expert.

India has been rather lenient in allowing transport of coal from mines, dirt and all.

The Ministry of Environment and Forests recently woke up and banned transport of unwashed coal beyond 500 km. Coal washeries remove impurities and dirt from the mined coal and the washed coal is of better quality, commanding a higher price. Thanks to the prod from the government, CIL is now investing in setting up its own washeries at mine sites.

MCL, for instance, is now setting up a 10 million tonnes per annum washery at the Basundhara mine and will eventually add four more of equal capacity at other sites. Selling washed coal is environmentally-friendly and commercially profitable too. Sahay points out that washed coal will command a premium of ₹400-500 a tonne over the present price of ₹750 a tonne.

Air pollution from burning coal in power plants cannot be eliminated, but it can certainly be controlled by adopting technologies such as IGCC (integrated gasification combined cycle). A pre-requisite for this though is good quality and consistency of coal. With 40 per cent ash content in Indian coal, the challenge is formidable indeed but washeries can at least help keep the quality consistent.

Why a billion tonnes?

There are those who believe that the importance of coal as a fuel source will reduce in the medium term. They point to environmental issues and the growing focus on renewables such as solar and wind as potential threats. Some even go to the extent of questioning whether power demand will continue to grow in the long term at the same pace as now.

MCL’s Sahay lists solar as a potential threat. CIL has already signed up with Solar Energy Corporation of India for setting up 1,000 MW of capacity across the country. MCL has set up a 2 MW solar plant at its headquarters in Sambalpur.

Yet, both Sahay and Partha Bhattacharyya are confident that coal will remain king. At present, the country imports about 240 million tonnes of coal, which by standards of Indian coal is about 300 million tonnes. Incremental output will substitute imports which is a good thing.

But the challenge will be in managing the road to a billion tonnes. Land acquisition issues must be overcome and the company will have to dig deeper into its pocket and rework project economics. CIL spends large sums of money in rehabilitation and resettlement of the original land owners. MCL, for instance, has to offer a job to every adult member of the family that has been displaced, apart from financial compensation and resettlement. It spends some more to skill these people for the job.

Yet, what is more important is the connect at the local level, says an industry veteran. The manager at the mine has to gain the confidence and the trust of the local community that surrenders its land.

The road to a billion tonnes of coal is clearly not easy. It must be paved with good intentions. Also, with smart economics.

Published on July 12, 2015
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