Indian coal industry: roaring to witness a great boost

Indian coal industry: roaring to witness a great boost
On back of high demand from major coal consuming sectors, the coal demand has been rising constantly. Even India’s share in the international coal consumers has become one of the largest. Anurag More and Dibyendu Roychowdhury interacted with some of the prominent industry experts and highlight the ongoing development across mining sector
India is one of the largest producers of coal and the demand is increasing. A new research report by RNCOS entitled “Indian Coal Industry Forecast to 2013” says, “The coal demand has been rising constantly in India on back of high demand from major coal consuming sectors, including power, cement and steel.” The study reveals that the growing industry demand mainly by power sector and the increasing government support will boost the coal production in the country. RNCOS also estimates that coal production will grow at a CAGR of around 9 per cent during 2011-12 to 2013-14.
According to the Research Compendium titled “Coal Mining in India 2012” by Metis Knowledge Series, India’s share in the international coal consumers has become one of the largest. Domestic coal production has been a dampener against the rising demand and as a result, many users have been on a coal asset buying spree globally.
The demand-supply gap as estimated by the Planning Commission in the ongoing year is likely to touch 142 million tonnes (MT), with domestic availability of only 554 MT against the requirement of 696 MT. This mismatch is likely to widen year-on-year and expected to cross 200 MT by the end of 12th Five Year Plan (FY 17). Coal production from domestic sources is expected to reach 1,275 MT by the end of 2031-32. Despite this rise, the country will still face an increasing demand-supply gap.Size of sectorThe Coal Ministry has projected that India’s annual coal demand can rise over 40 per cent by March 2017 to nearly 1 billion tonnes while domestic coal output may increase by less than 30 per cent, leaving a gap of around 300 MT that will have to be met by imports.
While talking about Indian’s coal industry, Santhosh Rao, GM South & East, Product Specialist Mining, Wirtgen India, said, “In 2011-12, India has produced about 550 MT of coal which was below the projected requirement of coal in the country. Around 140 MT of coal would have to be imported to meet the demand deficit.”
Whereas Indrajit Sen, Managing Director, International Combustion (India) Limited had something different to say. He explained, “Growth beyond 2012 will likely to remain sluggish with continuing regulatory and environmental issues and bans imposed on mining in certain areas pursuant to Supreme Court judgements. A bright spot, however, is the increasing number of Indian companies venturing overseas to secure stable, long-term supplies of minerals. We are anticipating the market to start to recover by the last quarter of FY 2012-2013.”
According to Sailendra Behera, Joint Managing Director of RSB Group, “In FY12, the coal production stood at about 550 MT. As announced by the Coal Minister, there is a 12 per cent increase in coal production in the 1st half of this year, compared to the corresponding period of the last year. The performance is expected to improve in the 2nd half of the year due to some firm initiatives by the Government such as streamlining coal block allocations.”
Private participation in sectorMr. Rao of Wirtgen India expressed his views on the importance of private participation. He emphasised, “If the country has to meet its GDP growth targets, achieving targeted coal production is absolutely essential. Here coal import is not an option.  We feel that the Government will take serious steps to address this demand and supply gap. Private participation in coal mining is definitely a solution and we believe all efforts towards this will be taken.”ChallengesIn the process of stimulating growth, hurdles are inevitable. Land acquisition is always a big challenge in the mining industry and with the recent controversies over illegal mining, the growth of mining sector is little affected.
Mr. Behera of RSB Group shone light on this issue by saying, “Some of the challenges faced by industry are lack of transparent policies in terms of mine allocation, market pricing structure, labour laws, safety norms, and pollution norms, to name a few. Poor infrastructure in terms of poor port facilities, railways and highways are also the big hurdle in the growth of the industry.”
TrendsWhile speaking about the trends in the mining sector, Mr. Rao added, “The mining methods with the least amount of environmental damage would be the trend for the future. Only through this, sustainable mining is possible.”
According to Mr. Behera, “The growth trend is very closely synchronised with the economic health of the country and currently going through a recovery path. However, the downturn has given significance to the equipment rental market and many OEMs now value this as a new vertical in their business.”
Steps to boost sectorPrivatisation will definitely address the growing demand for coal. New technology, operational efficiency and best mining practices will be introduced in the sector. Sustainable mechanism to address land acquisition, single window clearance for project clearances are some of the major steps that could boost the sector.
“The private participation would result in higher investments in the mining equipment sector which would gain directly from it. The production levels and efficiency of operations of the mines are expected to improve drastically,” added Mr. Behra.
Opencast miningOpencast mining is the major source of coal production in the country today. Mr. Rao described, “Out of the total 467 mines, Coal India Limited has 273 underground mines, 164 opencast mines and 30 mixed mines. Though there are 273 underground mines, they contribute only about 40 million tonne out of total production of 436 million tonne of Coal India. We understand that plans are on the anvil to modernise the existing underground mines to increase production.”
Whereas Mr. Behra said, “In India, the mining is mostly by opencast method. In 1973, underground mining consisted nearly 70 per cent of the total coal production, where as presently it is 15 to 20 per cent approximately of the total coal production. This is because of the surge in demand for raw materials and the quick and easy option to tap the ready reserves with minimum infrastructural development by way of Open cast mines instead of underground mines.
But, now the time has come to focus on underground mining since the reserves are fast depleting and it would be impossible to match the growing demand for raw materials without going for underground mining.”
Ground miningUnderground mining space isn’t open for all. However, Government is trying to reopen some mines which have been abandoned for long.
Mr. Behra explained, “Government should encourage private participation in underground mining and encourage technology companies to participate with latest machineries and practices. There should be clear and stringent governmental mining policies to encourage underground mining in India. A government body should be in place to control and enforce the safety and environmental concerns in mining, which would directly influence the growth of underground mining and bring sustainability to the mining operations.”
On back of strong government support and rising mergers and acquisitions of coal mines in overseas market, the Indian coal industry is set to witness a great boost. Recently, the Government has also de-allocated coal blocks and stake sales in PSUs to boost production and investment in the coal industry. It is anticipated that the demand for coal will surely gain momentum in near future.

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