by ajoy k das

India’s state-owned Coal India Ltd. (CIL) has firmed up major investments between the current fiscal year and 2023-2024 across 500 projects to achieve a production target of 1 billion metric tons per year (mtpy).

During 2019-2020, CIL notched coal production of 602 million mt.

Providing a breakdown of the mega investments over the next four fiscal years, the Ministry of Coal said $4.5 billion would be riding on construction of coal handling infrastructure across its mines, $3.4 billion on mine infrastructure and $4 billion on project development, assuming current exchange rate of INR 73 to a US dollar.

Additional investments would include a spend of $4.4 billion on diversification and clean technologies like coal-to-methanol projects, solar power, $259 million on exploration of virgin coal blocks, and $205 million on social infrastructure.

According to the minister of coal, the miner would invest an estimated $1.94 billion in two phases to construct 49 “first mile” connectivity across its coal mines. This would be for transportation of coal from pitheads to dispatch points and this would ensure higher efficiencies in coal handling enabling computer aided loading replacing the existing dependency on road transport involving manual loading.

Investments on construction of its own railway infrastructure and logistical handling equipment would involve additional investment of $178 million and $92 million in procuring its own freight wagon thereby reducing dependency on state transporter Indian Railways in allocating wagons at pitheads.

CIL has identified a total of 15 greenfield coal blocks for development through mine developer operators (MDOs) to reduce imports of dry fuel into the company. Total investments in developing these blocks has been estimated at $4.7 billion of which its own contribution to the investment would be around $2.3 billion.

Impacted by the pandemic, Indian coal imports during April-August 2020 declined 28% at 45.8 million mt, according to data sourced from major ports across the country.

However, the ministry of coal reckoned that the decline was a short-term blip and the trend would be reversed as industrial activities continue to recover from impact of the pandemic and directed thermal power producers to reduce dependency on import dry fuel.

To facilitate the shift of thermal power producers from imported coal to domestic fuel, CIL has created a new category of e-auction where the miner would set aside volume of 150 million mtpy of coal to be exclusively auctioned to thermal power producers who guarantee lowering coal imports and increasing domestic sourcing.

Domestic coal buyers, direct consumers as well as traders who had concluded coal import contracts over the past two fiscal years would be eligible to bid at this special category e-auction.