By: Yash Gupte
Coal India Limited or CIL produced 606.89 MT in 2018-19 and increased its production by 15.9 percent in last five years, taking the production to 703.21 MT in 2022-23. Coal India is expected to produce one billion tons by 2025-26.
The Ministry of Coal has set a target of producing 1024 million ton of coal in FY2023-24, a 13 percent growth year-on-year. Recently, India added another feather to its cap as the FY 2022-23 recorded the highest ever domestic production of coal. Prime Minister Narendra Modi in a tweet, expressed his happiness over the highest ever coal production in the history of India. The PM tweeted, “Outstanding accomplishment in an important sector for economic growth.” The government is emphasizing on increasing domestic coal output and reducing non-essential coal imports into the nation. Production of coal grew by 8.67 percent in 2021–2022 compared to the previous year. During the current year till February, 2023, domestic coal production has increased by over 15 percent compared to the same period of last year. In 2023–2024, it is estimated that domestic coal production will reach more than 1BT. The Ministry of Coal has conceptualized an Action Plan for the FY 2023-24 with the goal of achieving Aatmanirbhar Bharat by enhancing the production, efficiency, sustainability, new technologies etc. in the coal sector.
In comparison to 716.08 MT in 2020–21, the nation as a whole produced 778.19 MT of coal in 2021–22. Around 28 of the top 37 coal mines produced more than 100 percent of their total output in January 2023, and three other mines produced between 80 and 100 percent. The coal production in FY 2022-23 increased by 14.65 percent to 892.21 MT as compared to 778.21 MT in 2021-22.
The largest tranche of the commercial coal mine auctions were launched by the Ministry of Coal on November 3, 2023, under the 6th round and the second attempt of the 5th round. With several first-time bids in this round and an average revenue share of 22.12 percent, the auctions saw fierce competition. This is an indication of the sector's ongoing interest as well as coal mining's secure future in India. This also signifies that the reforms brought in by the Government in the coal sector through the introduction of commercial coal mining have been well received by the industry. Also, the Ministry of Coal has successfully auctioned 87 coal mines in less than three years and according to estimates, these coal mines are expected to generate a revenue of Rs 33,200 crore and generate three lakh employment opportunities. The Coal Ministry has also launched the process of 7th round of auctions for a total of 106 blocks on March 29, 2023.
Also, as per the latest figures (till March 2, 2023) of the Ministry of Coal, India’s coal production exclusively from commercial mines has crossed 100 Million Ton (MT) for the first time. Coal production from commercial coal blocks was around 5.09 Lakh Ton on March 2, 2023 which was the highest ever single day production. Production from captive/commercial coal mines during current FY till February has increased by 29.8 percent over FY 2021-22. Coal ministry is hopeful of achieving more than 112 million ton production from captive/commercial coal blocks in 2022-23 with an increase of about 31 percent over last year.
According to a report published by CareEdge Ratings, India’s coal production will increase in financial year 2023-24, driven by a ramp-up in production of state-owned Coal India Ltd (CIL) and NLC India Limited by engaging mining developers cum operators (MDOs). Additional output is anticipated from both the current captive mines and the new ones.
Source: Ministry of Coal
It is evident from the above chart that there has been an increase in the domestic production of the coal and decrease in the import of coal in the country. The FY 2022-23 recorded the highest ever domestic production of coal at 892.21 MT and also recorded the lowest import of coal at 186.05 MT. India recorded highest ever import of coal in the year 2019-20. About 248.53 MT of coal worth Rs 15,27,320 million was imported in 2019-20.
The government has taken several steps in order to reduce imports and maintain a constant supply of coal in the country. Some of the steps are- Regular reviews by Ministry of Coal to expedite the development of coal blocks, Single Window Clearance portal for the coal sector to speed up the operationalization of coal mines, Project Monitoring Unit for handholding of coal block allottees for obtaining various approvals / clearances for early operationalization of coal mines. Apart from this the Ministry of Coal has requested the Ministry of Environment, Forest and Climate Change (MoEF&CC) to allow coal mines with existing Environmental Clearances to increase their production up to 40 percent, to hike by up to 50 percent without Fresh Environmental Impact Assessment or Public Consultation. Talking about the import of coal, according to the current import policy, consumers themselves may freely import coal (under Open General Licence) based on their own needs and commercial discretion.
For ease of doing business, the Ministry of Coal has established a Single Window Clearance System (SWCS) portal. The Ministry’s unique project, SWCS, aims to develop a platform for obtaining multiple clearances for early operationalization of coal mines, which would ultimately lead to an increase in the nation's coal production through a single entry point. In order to provide a boost to the mining sector, 100 percent Foreign Direct Investment has also been allowed for commercial mining.
At the launch of 7th round of commercial coal mines auction and signing of agreements with successful bidders of the 6th round of auctions, Defence Minister Rajnath Singh urged the coal sector of the country to further ensure energy security of India to meet the requirements of our fast growing economy. He marked that contribution of coal sector is crucial to India’s economic growth.
Source: Ministry of Coal
Coal India Limited or CIL produced 606.89 MT in 2018-19 and increased its production by 15.9 percent in last five years, taking the production to 703.21 MT in 2022-23. NITI Aayog in a draft report estimated that India’s coal demand will increase to 1.1-1.3 billion tons by 2030. Coal India is expected to produce one billion tons by 2025-26. Exploring and utilising the alternate sources of electricity generation is extremely important for the country as India faced massive power outages and crisis in the previous year.
With 737.9 million tons of total dispatches in FY23, a 9.1 percent year-over-year growth, the domestic coal consumption by the power sector is still strong. Dispatches to the electricity industry are expected to keep increasing, according to CareEdge Research, due to rising demand from coal-based power plants. Tanvi Shah, director of CareEdge Advisory & Research, observed that although imports have increased compared to previous year due to greater blending requirements, government measures to increase domestic output will, in the medium to long term, reduce dependence on imported coal. Due to the increased demand, especially in China and India, coal prices are predicted to stay high relative to pre-pandemic averages.
Also, the coal ministry is working on up to 67 first mile connectivity (FMC) projects, which would carry coal from pitheads to dispatch locations, and they should be finished by 2027, according to official sources. According to the sources, Coal India Limited would take on 59 of the 67 FMC projects, Singareni Collieries Company Ltd. will take on five, and Neyvali Lignite Company will take on the other three. The ministry has created a strategy to enhance the mechanised coal transportation and loading system under FMC projects in order to eliminate road transportation of coal in mines. Coal handling plants (CHP) and SILOs with rapid loading systems have the advantages of crushing, coal size, and quick computer-assisted loading.
The increased demand for electricity was triggered by hotter-than-normal temperatures. The electricity supply in the country had fallen short of demand due to a shortage of coal, which fuels 70 percent of India’s power demand. But the recent coal statistics suggest that there is enough coal in the country to generate the required electricity.