India is witnessing strong coal demand this year so far, on the back of increased coal-fired power generation. But, with government-owned Coal India Limited (CIL) struggling to keep pace with demand for the fossil fuel, captive miners are stepping up their production.
During the first seven months of FY’22 (Apr-Oct’21), Indian coal production increased 12% y-o-y to 379.55 million tonnes (mn t), in which the share of CIL and SCCL grew 6% and 60% respectively.
It is important to note that CIL and Singareni Collieries Company Ltd (SCCL) are the two major coal producing companies in the country which cater to almost 90% of the overall production. The remaining output comes from the mix bag of captive and merchant miners.
But, indicating impressive growth, non-CIL/SCCL miners too contributed almost 12% in the total volume by producing 44.68 mn t during Apr-Oct’21, which was 34% higher y-o-y compared to 33.31 mn t in Apr-Oct’20. (The Ministry of Coal has not provided individual break-up of company-wise production).
Significance of captive miners
Because of the lower coal stock position at power plants, captive miners were asked to raise their production so that dependency on CIL could be reduced.
Responding to the call, many power producers, such as NTPC, Rajasthan Rajya Vidyut Nigam Limited (RRUVNL), and Reliance Power ramped up production from their allocated coal blocks to meet their extra demand, whereas some of them even managed to divert their excess production to other power plants, to augment the latters’ supply.
Besides, the recent amendment to the Mines and Minerals (Development and Regulation) Act allowed these captive miners to sell up to 50% of their coal produce, but after meeting the requirement of their linked end-use plant.
Consequently, some captive miners have been active in selling coal via auctions at a time when CIL’s auction sales are affected.
Upcoming auctions include sale of 500,000 tonnes (t) of coal from Nevyeli Lignite Corporation’s (NLC’s) Talabira coal mine, on 18 Nov’21. On similar lines, Odisha Coal and Power has intended to sell 100,000 t of coal from its Manoharpur mine on 25 Nov’21.
The emergence of captive mining against the backdrop of the recent coal shortage highlights the under-utilisation of existing and abundant coal resources within the country. This indicates there is plenty of scope for the coal miners to step up production to mitigate the supply-demand gap.
It is important to note that the government has sold 28 coal blocks across the two tranches of auctions conducted under the newly-introduced commercial mining scheme, but none of these have been able to commence operation till date.
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