Executive Summary
Coal has an important role in the economic development of a country. Worldwide, the total primary energy supply (TPES), petroleum accounts for 38% of TPES, followed by Coal (24%) and natural gas (24%). In India, Coal accounts for 55% of total commercial energy demand followed by oil & petroleum (20%) and natural gas. In addition, other industries like steel, cement, fertilizers, chemicals, paper and any medium and small industries are dependent on coal for their process and energy requirements. In the transport sector, though direct consumption of coal by the railways is nominal on account of phasing out of steam locomotives, the increasing electrified traction of railways is dependent on coal converted to electric power.
Present coal consumption in the country is around 310 million tonnes of which the requirement of the power industry (including captive plants) is about 240 million tonnes. In order to meet the rising coal demand for power industry and other consumers it is estimated that an additional annual availability of around 25 million tonnes will be required by the year 2015. India is world's third largest coal producers but instead of this according to the 11th Planning Commission Report (2007-12) it has been estimated that, India may have to import about 76 million tonnes of the fuel by 2011-12 to meet domestic requirement as total demand is estimated to nearly double to 710 million tonnes. The country may need to import 30-40 million tonnes of superior grade thermal coal and an additional 36 million tonnes of coking coal by 2011-12 to meet the shortages.
The Indian Coal Reserves
Source: www.mapsofindia.com
India has one of the largest reserves of coal and is the world's top coal producers after the US and China. Proven coal reserves stand at around 92 billion tonnes, while total reserves are estimated at more than 240 billion tonnes. Coal would remain the dominant commercial energy source with total demand across all sectors such as power, cement, steel and paper estimated to rise to about 710 million tonnes as against about 370 million tonnes in 2005-06. Power sector alone would require about 503 million tonnes by 2011-12, when total installed electricity generation capacity is projected to increase to about 200,000 MW from 1,25,000 MW at present.Thus, the Indian coal industry has a diversified user base. However, power sector accounts for the bulk of the consumption at 74%. Other prominent user sectors include steel, cement and fertilizers.
Coal India Limited the state-run company is doing well in the Coal sector for India but despite of this there would be a huge import of coal in future. This embarked a sudden expansion of plans of CIL towards the increase of coal production for future Indian demand. According to the Eleventh Plan, it has been estimated that there would be an increase of 60% in the production of the Coal in India by CIL. According to the Government, Coal imports are expected to increase about 11.87% this fiscal that would be nearly 46.6 Mt as against on going 41.67 Mt in 2005-06. It has been estimated that out of the total coal imports in 2006 -07, there would be a requirement of 24.19 Mt of coking coal and 22.43 Mt of non-coking coal as compare to 23.89 Mt of coking and 17.78 Mt of non-coking coal in 2005-06.
Integrated Energy Policy
The Planning Commission constituted an Expert Committee to prepare an integrated energy policy linked with sustainable development that covers all sources of energy and addresses all aspects including energy security, access and availability, affordability and pricing, efficiency and environment in August, 2004 under the Chairmanship of Dr. Kirit S. Parikh, Member, Planning Commission. The Expert Committee submitted its report in August, 2006. Major recommendations for coal sector are listed below:
Increasing number of Coal Producers
• The number of players in coal mining should be increased.
• Captive block holders must be permitted to sell incidental coal surpluses during the development and operation of a block to CIL.
• Group-captive mines should be allowed for small end-users.
• Coal blocks held by Coal India Limited that cannot be brought into production by 2016-17, either directly or through joint ventures, should be made available to other eligible candidates for development with the condition that they be brought into production by 2011-12.
• Allot tees of captive blocks in general should be required to work the block within a specified time limit failing which allotment should be cancelled and/or a pre-agreed penalty imposed.
• The gestation periods for the end-use project may be different than that of the coal mine. To ensure that both the mine and the end-use project are developed in a cost-effective manner the innovative use of short-term linkages can be made. This must be linked with strictly enforced guarantees that back performance related to both the end-use project and the captive mine.
• Transfer pricing of coal from captive mines needs to be established both for the sake of assessing coal royalties as well as tariffs in a regulated sector such as power.
Pricing of Coal
• High quality coking and non-coking coals which are exportable may be sold at export parity prices.
• 20% of the total coal produced should be sold through e-auctions.
• Remaining coal should be sold under long-term Fuel Supply and Transport Agreements (FSTA’s).
• Pithead price of coal under FSTAs should be revised annually by a coal regulator.
• Replace the practice of grading coal under wide bands of the empirically determined UHV by the international practice of grading coal based on GCV.
Reducing Coal Cost
• Rail freight rates for coal transport should be rationalized.
• Infrastructure status should be extended to the coal industry.
• Duties on capital goods imported for coalmines must be lowered.
• Coal companies should be required as per international practice to “prepare” and “dress” coal prior to sale.
Facilitating Production
• Strategies for matching the growth of infrastructure needed for movement of coal to load centres should be aligned with the growth of coal industry.
• Wherever the techno-economic parameters of the geological resource demands development of underground mine, related technology must be encouraged by giving incentives.
• National Rehabilitation and Resettlement Policy for people affected by coal/lignite mining projects should be mooted. Such policy should be acceptable to all state governments.
• Early approval for the projects Environmental Management Plan by simplification of procedures, preparation of comprehensive EMPs and demonstration of environmental responsibility on the ground.
• Notify in-situ coal gasification and coal liquefaction as end-uses under the current captive consumption policy.
Regulation
Institute an independent regulatory body to regulate upstream allotment and exploitation of available coal blocks to yield coal, coal bed methane, and mine mouth methane, coal to liquid and for in-situ coal gasification.
The follow up action on most of the recommendations pertaining to Ministry of Coal has already been initiated.
MAJOR COAL PLAYERS
1) Coal India Limited (CIL)
a) Eastern Coalfields Limited (ECL)
b) Bharat Coking Coalfields Limited (BCCL)
c) Central Coalfields Limited (CCL)
d) Northern Coalfields Limited (NCL)
e) Western Coalfields Limited (WCL)
f) South Eastern Coalfields Limited (SECL)
g) Mahanadi Coalfields Limited (MCL)
h) North Eastern Coalfields Limited (NEC)
2)Singareni Collieries Company Limited (SCCL)
3)Neyveli Lignite Corporation (NLC)
4) Rajasthan State Mines & Minerals Limited (RSMM)
5) Gujrat Mineral Developement Corporation
6) Jammu & Kashmir Minerals Limited
7) Bihar State Mineral Developement Corporation Limited
8) Indian Iron and Steel Company Limited
9) Tata Iron & Steel Company Limited
10) Damodar Valley Corporation
11) Bengal Emta Coal Mines Limited
The Major Coal Producing Mines of India
Source: www.mapsofindia.com
The Lignite Reserves of India
Source: www.mapsofindia.com
Coal Exploration
The exploration of Coal takes place in two stages:
• The Geological Survey of India (GSI) undertakes Regional Exploration of large areas to find out the broad availability of Coal seams, geological structure, resources etc. on a continuous basis, confirming the presence of Coal. The funds for the same are provided by the Ministry of Mines, in order to supplement and augment the efforts of the GSI for Regional Exploration. Government introduced a scheme of Promotional (regional) Exploration in Coal and Lignite in 1989 which is under implementation on plan-to-plan basis. The mineral Exploration Corporation (MECL), Geological survey of India (GSI) and Central Mine Planning & Development Institute (CMPDI) also provide there services for carrying out the Promotional (regional) Exploration in various parts of the country. Ministry of Coal provides fund for this scheme. The Sub-committee on Energy Minerals (Group III of Central Geological Programming Board) with representatives of GSI, CMPDI, MECL, Singareni Collieries Company Limited (SCCL), Neyveli Lignite Corporation (NLC), CFRI, Ministry of Coal, Planning Commission etc., approves the programmes, coordinates and reviews the Regional Exploration work. CMPDI acts as a nodal agency for disbursement of funds for Promotional Exploration besides carrying out technical supervision of MECL’s work in coal Sector.
• Detailed Exploration: In the second stage, Detailed Exploration is carried out in potential areas of small size identified through Regional/Promotional Exploration, as per the requirements of Coal Companies in CIL blocks and others in Non-CIL/Captive blocks. Such blocks are taken up for detailed drilling to bring the reserves into Proved category and thus to reduce the uncertainties. The results of Detailed Exploration are incorporated in Geological reports that lead to Mine Feasibility Studies/Mining Plans and formulation of Project Reports of Mining. The reports are used for exploitation of coal reserves considering factors like emerging demand, its location, and availability of infrastructure for coal evacuation and techno-economics of the mine development including coal quality. The Detailed Exploration is funded by Coal Companies from their capital budget. CMPDI directly, and in a limited manner through State Governments, carries out detailed exploration in CIL command areas whereas SCCL takes up such work in its own area. CMPDI is also conducting Detailed Exploration in Non-CIL/Captive Mining blocks within the CIL Command Area.
Captive Coal Mining Blocks
Under the Coal Mines (Nationalisation) Act, 1973, coal mining was mostly reserved for the public sector. By an amendment to the Act in 1976, two exceptions to the policy were introduced viz.
(i) captive mining by private companies engaged in production of iron and steel and
(ii)Sub-lease for coal mining to private parties in isolated small pockets not amenable to economic development and not requiring rail transport.
.
Mapping of buffer zone have been completed for some of the area for Environment Management Plan (EMP) and water balance study these are:
i) Chitra, Gaurangdih and Kunustoria OCPs of Eastern Coalfield Ltd. (ECL).
ii)Golukdih, Shatabdi, Dahibari Basantimata and Chaptoria OCPs of Bharat Coking Coal Ltd. (BCCL).
iii)Ashoka, Purnadih and New Giddi ‘C’ OCPs of Central Coalfield Ltd. (CCL).
iv)Bhubaneswari, Samleswari, Basundhara and Kaniah-II OCPs of Mahanadi Coalfield Ltd. (MCL).
v) Gevra, Dipka and Kusmunda OCPs of South Eastern Coalfield Ltd. (SECL)
Digital processing of leasehold areas of Bhanegaon, Gondegaon and Umrer OCPs of Western Coalfield Ltd and Ashoka and Piparwar OCPs of Central Coalfield Ltd is under progress for monitoring of land environment towards compliance of MOEF stipulation.
• Land use/cover mapping of buffer zone of 21 mining projects of different subsidiaries of CIL is under progress.
• Settlement mapping of six villages of Lakhanpur project of Mahanadi coalfield Ltd. based on CARTOSAT & IKONOS satellite data is under progress.
• CIL R&D project titled “Development of methodology for rapid volumetric analysis of excavated in-situ overburden using high resolution satellite, ALTM, terrestrial laser scanner supported with ETS through Digital Photogram-metric Technique" in collaboration with NRSA is under progress.
Coal Demand
The Working Group Committee has estimated that there would a requirement of 731.10 Million tonnes of Coal & Lignite in India in the XI Financial Plan (20011-12). The annual growth rate of Coal demand is expected to be about 9% over X plan terminal year demand (BE) of 473.18 Mt. The all India Coal demand for the year 2007-08 has been assessed at 492.50 Mt. Sector wise break-up are:
Coal Demand (Million tonnes)
Sl.No. Sectors XI Plan (2011-12)/ Projections 2007-08
1. Steel & Coke Oven 68.5/ 38
2. Power (Utility) 483/ 333
3. Power (Captive) 57.06/ 33.6
4. Cement 31.9/ 26.8
5. Sponge Iron 28.96/ 15.1
6. BRK & Others 61.68/ 49
Total 731.1/ 495.5
(Source: Ministry of Coal Annual Report 2006-07)
Coal Supply
The required Coal supply in the terminal year of XI Plan is projected to be 680.00 Mt. The supplies from CIL & SCCL sources are expected to be 520.50 Mt and 40.80 Mt respectively. Other producers are anticipated to increase to a level of 118.70 Mt. The demand-supply gap emerging from these projects would be 51.10 Mt which would be met by imports of 40.85 Mt of Coking coal and 10.25 Mt of Non-Coking Coal. The scenario is like:
Demand-Supply Gap (Million tonnes)
Source XI Plan
2011-12 (Proj./) 2007-08
CIL 520.5/ 385.9
SCCL 40.8/ 38.04
Others 118.7/ 37.95
Total Indigenous
Supply 680/ 461.89
Import
Coking 40.85/ 20
Non-Coking 10.25/ 10.61
Total Imports 51.1/ 30.61
Gap 0/ 0
(Source: Ministry of Coal Annual Report 2006-07)
Coal Production
Coal is considered as the most essential source of electrical energy generation in India. It has been found that 75% of the coal in the country is consumed the Power Sector. In addition there are other sectors required coal like Steel, Cement, fertilizers, Chemicals, Paper and millions of other medium and small-scale industries are dependent on coal. In the transport sector there is negligible use of direct coal, as Railways are using very less number of steam locomotives, but there is a requirement of coal for the electric traction as coal is converted into electricity. The Ministry of Coal is engaged in the developing of Coal resources of the country in such a manner to meet the requirements of Coal for different consuming sectors.
The production of Coal in India is given emphasis and there are programmes to invest in Modern technologies for Coal production to raise the production level as per the increasing requirements. This can clearly be shown from the progress CIL had done from the level of about 70 million tonnes at the time of nationalisation of coal mines to in 1970’s to 407.02 million tonnes in 2005-06.
Coal India Limited and its subsidiaries are the major Coal producers in India, about 250.721 million tonnes of Coal is produced by Coal India Ltd. And its subsidiaries during the year 2005-06 (April-Dec.) this is leading to a growth of 4.5%. Singareni Collieries Ltd. (SCCL) is the main source of Coal supplier in the Southern region. The company has produce 26.097 million tonnes of coal during 2006-07 (Apr.-Dec.) as against 24.537 million tonnes during the corresponding period last year. Small producers of coal are TISCO, IISCO, DVC and others.
Productivity
The productivity is measured in terms of raw Coal produced (output) in tonnes per man shift (OMS). There has been improvement in the OMS in Coal Companies in last decade for CIL group of companies. The OMS at the time of nationalisation was 0.58 tonnes and 3.35 tonnes in Coal India Ltd. in the year 2006-07 for (Apr.-Dec.). In SCCL OMS is 2.21 tonnes in 2005-06 (Apr.-Dec.) due to increased number of high skilled labour, better & modernisation in the Equipments.
Distribution
The distribution of Coal is done through the Standing Committee (Short period) operating under the Ministry of Coal comprising ministers of parliament, Ministries of Government of India. They allocate Coal to the Core sectors consist of Power, including CPP, Steel, Cement, Defence, Fertilizers, exports Aluminium, Paper and Railways.
Import of Coal
According to the present Import Policy, Coal can easily be imported by the consumers as per there requirements based on their commercial prudence. Coking Coal is imported by the Steel Authority of India Limited (SAIL) and other steel manufacturing companies. This is mainly to fulfil the gap between the requirement and the availability of the Coal to improve the quality. Coast based power plants, cement plants, captive power plants, sponge iron plants, industrial consumers and coal traders are importing non-coking coal. Coal is mainly imported by the Pig-Iron manufacturers and Iron & Steel sector consumers using mini-blast furnace.
Details of import of coal and products
during the last five years
(Million tonnes)
Coal----------2001-02/02-03/03-04/04-05/05-06
Coking Coal-----11.11/12.95/12.99/14.57/17.11
Non-coking Coal--9.44/10.31/08.69/11.56/19.75
Coke-------------2.28/02.25/01.89/02.51/02.56
Total Import----22.83/25.51/23.57/28.64/39.42
(Source: Ministry of Coal Annual Report 2006-07)
Coal Consumers Council
There is consumer council for the rectification of consumer's grievances and monitoring of complaints received from the consumers, one Regional Coal Consumers Council has been set up for each coal company. An Apex body viz. National Coal Consumers Council has also been set up at the Headquarters of Coal India Limited. In case the complainant does not receive a reply within a month or the complainant is not satisfied with the reply of Coal Company, he may prefer a complaint to the National Coal Consumers Council.
Royalty
Royalty is an amount payable by a lessee to the lessor for removing or consuming a mineral Section 9(1) of the Mines and Minerals (Development & Regulation) Act, 1957 requires the holder of a mining lease or his agent, manager, employee, contractor or sub-lessee to pay royalty in respect of any mineral removed or consumed from the leased area at the rate specified in the Second Schedule of the Act. Section 9(3) of the MMDR Act empowers the Central Government to enhance or reduce the royalty rates in respect of any mineral by notification in the official Gazette with effect from such date as may be specified in the notification. This revision is done by amending the particular entry of royalty rate for the respective mineral in the Second Schedule of the Act. The provision to Section 9(3) of the act prevents the Central government from enhancing the rate of royalty in respect of any mineral more than once during any period of three years. The Act also does not mandate that royalty on coal should be revised after every three years.
Royalty Rates(Rs. Per tonnes)
Coal Royalty Rates
Coal group w.e.f. 13.2.1981/1.8.1991/11.10.1994/16.6.2002
Group I Coking Coal
SG I, II, WG-I---------7/-------150/--------195/---250
Group II,
Coking
WG-II, III;
Non-coking AB,
Semi Coking Gr I,
Semi Coking Gr II----6.5/------120/--------135/----165
Group III
Coking coal
WG- IV,
Non-coking Coal-----5.5/-------75/---------95/-----115
Group IV
Non-Coking D,E------4.5/-------45/---------70/------85
Group V
Non-Coking F,G------2.5/-------25/---------50/------65
Group VI,
Coal
Produced in Andhra---5/--------70/---------75/------90
(Source: Ministry of Coal Annual Report 2006-07)
Fixing Royalty Rates
The Royalty rates on Coal/ Lignite are fixed by the Study group constituted by the Ministry of Coal. The Study Group interacts with and takes views of all the stakeholders, viz. the producing States, the consuming States and the consumer sectors such as power, iron and steel, cement etc. After taking into account the views of all the stakeholders and other relevant factors, the Study Group makes its recommendations to the Ministry. The Ministry, after considering the recommendations, moves a proposal for Government decision (CCEA). The consequent decision is then notified and the new rates of royalty come into effect from the date of such notification. The above process is objective, transparent and has served the purpose well.
Fresh Revision of Royalty Rates
A Committee was constituted on 02.06.2005 under the Chairmanship of Additional Secretary, Ministry of Coal to consider revision of rates of royalty on Coal and lignite. The Committee submitted its report on 14.07.2006 after detailed deliberations with all stake-holders.
• The incidence of cess levied by some State Governments together with the enhanced royalty rates tends to have a cascading effect on the coal consuming sectors and this has caused disparities across the States. This issue was discussed in a meeting under the chairmanship of Secretary (Coal) held on 10.10.2006 with the representatives of the coal producing States. The views of the State Governments on the matter have been obtained.
• Based on the report of the Committee on royalty and the consultations held with the State Governments. A decision will be taken shortly.
State Wise & Company Wise Royalty Paid
by CIL(2006-07) (Million Rupees)
up to Nov. 2006
Comp/W.Ben./Jhark./Orissa/Ma.Pr./Chhat./Mahar./U.Pr./Assam/Total
ECL/-----7.86/45.61--/--------/---------/--------/---------/-------/--------/53.47
BCCL/----0.11/142.69/--------/---------/--------/---------/-------/--------/142.8
CCL/----------/157.78-/--------/---------/--------/---------/-------/--------/157.78
WCL/---------/---------/--------/40.20-/---------/200.81/-------/--------/241.01
SECL/--------/---------/--------/94.79-/384.36-/--------/-------/--------/479.15
MCL/---------/---------/340.02/---------/---------/---------/-------/-----/340.02
NCL/---------/---------/---------/242.42/---------/---------/41.54/------/283.96
NEC/---------/---------/---------/---------/---------/---------/-------/12.37/12.37
-
Total/7.97/346.08/340.02/377.41/384.36/200.81/41.54/12.37/1710.56
(Source: Ministry of Coal Annual Report 2006-07)
The 1981 coal royalty rates are still continuing for the State of West Bengal on the ground that the Government of West Bengal is continuing to levy cesses on Coal which have been withdrawn by the other State Governments.
Royalty rates of Neyveli Lignite Corporation
Period/Amount (Million)
2003-04/ 960.2
2004-05/ 1078.4
2005-06/ 1022
2006-07
up to 31.12.2006)/ 698.7
Provisional for the period
January’2007 to
March’2007/ 270
(Source: Ministry of Coal Annual Report 2006-07)
Royalty rates of SCCL
Period /Amount (Million)
2003-04 / 3044
2004-05 / 3122.2
2005-06 / 3240
2006-07
(up to Nov.,2006)/ 1710
(Source: Ministry of Coal Annual Report 2006-07)
Coal Conservation
Conservation of Coal leads to the maximum recovery of the in-situ reserves of the Coal. The conservation of Coal is taken into account at the beginning, right from the Planning stage and it is ensured to be implemented during the excavation stage. This leads to the maximum recovery of the Coal from the original reserves.
Extraction of thick seams is done at a shallow depth by the commonly adapted technology of mechanised opencast mining. The percentage recovery by this method is 80%-90% which helps in the conservation of the resources too. The total Coal production is 85% due to this new adapted method of mining. The thick seams which were earlier developed by the Bord & Pillar method or other underground methods of mining and have been standing on the pillars for long in absence of a suitable technology for extraction, but, now as the technology has been improved therefore it can be extracted out by HEMM mining equipments of suitable types as it is in use in some of the mines of WCL, BCCL, CCL and ECL under shallow cover.
In case of underground mining, the introduction of mechanisation has resulted in increased percentage of extraction thereby leading to better conservation of coal. Replacement of the prevalent manual Bord and Pillar method of mining by semi-mechanised method of extraction (with SDL/LHD) has improved the percentage of extraction. In underground mining of thick seam where earlier the extraction percentage was very low, new methods of mining with relatively higher recovery such as Blasting Gallery and Cable Bolting have been successfully adopted.
Long wall mining technology yields higher percentage of recovery (70% to 80%) with higher rate of output compared with other methods of underground mining. This method has been implemented in some mines of SECL, ECL and BCCL of Coal India Limited as well as in SCCL. There is a problem of geological conditions in India due to which adoption of these mining techniques is not been possible.
Sources• Annual Report 2005-2006, Central Mine Planning & Development Institute
• Annual Report 2006-07, The Ministry of Coal
• XI Planning Commission Report on Mineral Reserves, Exploration & Future of Indian Minerals
• Infraline: Consumption in the Power Sector
• Home pages of the Companies:
http://www.coalindia.nic.in
http://www.coal.nic.in
http:// www.bccl.cmpdi.co.in
http:// www.ccl.cmpdi.co.in
http:// www.mahanadicoal.nic.in
http:// www.ncl.gov.in
http:// www.tinsukia.nic.in
http://www.westerncoal.nic.in
http://www.secl.nic.in
http://www.scclmines.com
http://www.nlcindia.co.in
http://www.rsmm.com
http://www.jkminerals.com
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