The Indian coal market has made a strong comeback recovering from the slowdown induced by COVID restrictions. However, despite record-high levels of production attained by the coal companies, supply fell short of demand last year.
Nevertheless, building on this transition, emphasis has been laid upon higher coal usage to fuel the economy. In this regard, the government is planning to enhance coal production from current levels of 778 million tonnes (mnt) in FY22 to 1,500 mnt by FY30.
The launch of the commercial mining scheme packed with lucrative provisions has been a major step in this direction as it aims to support the state-run miners – Coal India Ltd (CIL) and Singareni Collieries Company Ltd (SCCL).
At the same time, several initiatives have been taken to address the challenges involved in coal mining.
Liberalisation in mining approvals
The Ministry of Coal (MOC) has informed that prior approval is no longer required if vesting/allotment order has already been issued for a coal mine. At present, 18 mines with annual capacity of 48.1 mnt were approved under the new regime, thereby reducing the lag time by a minimum of one year.
In addition, the prerequisite involving mine plan approval for increasing production in excess of 50% of sanctioned rated capacity has been removed. As per a ministry report, two mines have already received grants, while more than 10 mines are in the pipeline for capacity extension under this reform.
The introduction of an online system for approval of mining plan and single window clearance was another attempt to facilitate mine openings. Under this facility, applications for 36 mines were processed in less than three months, which would have otherwise taken 6-12 months.
Besides, extension of mining lease for 50 years from the earlier 30 years has directly benefitted the 300-plus mines of CIL.
Sale of excess coal from captive mines
The MoC has previously allowed the captive coal miners to sell up to 50% of their production after meeting the requirements of the end-use plant. A special report by the ministry highlights that coal to the tune of 9.1 mnt has been sold under the relaxed captive mine usage guidelines.
Little progress was seen in captive mining ever since the coal block allocation was cancelled by Supreme Court. However, production from these blocks is increasing progressively due to commencement of operation by new miners.
A similar support from the newly-launched commercial mining auctions is also expected, but its impact has been largely overshadowed by the slow development of coal blocks. Notably, out of the 64 blocks that have been allocated so far, only two have started production.
During April-October, 2022 coal production from the captive and commercial miners (non-CIL/SCCL mines) increased by 38% y-o-y to 61.8 mnt, while total production has jumped to 448.17 mnt as against 379.6 mnt in the year-ago period.
Leave a Reply