Total coal output in India is expected to increase by 6.4%. Private companies such as Hindalco, Vedanta, Adani Group Chhattisgarh and other coal-bearing states are expected to be major players.
According to the latest report by the UK-based analytics firm GlobalData, India’s coal production is estimated to surge by 6.4 per cent i.e., from 777Mt in 2020 to 827.8Mt in 2021. The major factor for the rise in total output is the entry of more private players in the sector.
Private players such as Hindalco, Vedanta, Adani Group Chhattisgarh and more have been managing coal blocks across Chhattisgarh and other coal-bearing states. This will play a crucial role in realising the government’s vision for the sector.
The UK-based analytics firm expects India’s coal production to rise at a compound annual growth rate (CAGR) of 9% in order to reach 1.2Bnt by 2025. The government’s target, on the other hand, stands at around 1Bnt. However, Vinneth Bajaj, a mining analyst at GlobalData said that the ongoing pandemic might pose some challenges to this estimation.
The sudden increase in new covid-19 cases since March 2021, has hampered the coal operations in India. Despite this, there was an uptick in coal offtake in the month of April this year, which strongly indicates a revival in demand in the coming months.
The sector is largely influenced by the coal-rich states like Chhattisgarh. The latter has over 16 per cent of the total coal deposits of India. The state also ranks 2nd in the total coal production by contributing more than 18 per cent to the overall production of the country.
With numerous coal mines containing huge reserves in different districts, the state is highly preferred by the miners. To simplify the auction process and attract major investors, the government had also amended the Coal Mines (Special Provisions) Act, 2015 last year. Over the years, Chhattisgarh has seen the involvement of several private and public entities across the mines, which largely drive the economy.
To operate coal mines with the latest technology and boost competition, Adani Group mining Chhattisgarh signed a pact with Maharashtra State Power Generation Co Ltd for the development of the Gare Palma Sector II coal mine. The mine’s peak rated capacity and total mineable reserve stand at 23.6 million tonnes per annum and 553.177 MT, respectively. The project in Chhattisgarh by Adani Group, which include minedevelopment and final mine closure, will run for 34 years.
In the same state, Adani Enterprises, the flagship company of the Adani Group, launched MDO operations at the Parsa East-Kente Basan mine that is owned by Rajasthan Rajya Vidyut Utpadan Nigam Ltd (RRVUNL). The estimated coal reserve in the block was 450 million tonnes. Post the coal supply by Adani Group in Chhattisgarh, Rajasthan might become power surplus.
Apart from this, mining giant Vedanta Ltd had bagged Chotia block in Chhattisgarh during the first phase of coal mine auctions. In the near term, the yearly output from the block is estimated to reach 1 million tonnes. On the other hand, Aditya Birla Group’s Hindalco Industries had also won the final bid for Gare Palma-IV/5 in Chhattisgarh with extractable reserves of 42.43 MT per annum.
Considering the richness of the state in terms of coal, Sarda Energy and Minerals placed the winning bid for Gare Palma IV/7 coal mine in Chhattisgarh. The mine has a total geological reserve of 234.205 million tonnes and the company quoted a major revenue share of 66.75 per cent during the first tranche of commercial coal mine auction in India.
India is increasingly unlocking the participation of private entities in coal mining. This will play a key role in improving the sector’s overall revenue and reducing dependency on imports. It will also fulfil the government’s objective to promote transparency, leverage technology, competitiveness and more. The government has also been laying a robust framework to enhance productivity and reduce environmental impact across the mining operations.
Recently, the government has also announced to offer 67 mines with a total resource of almost 36 bn during the 2nd tranche of coal mines auctions for commercial mining. It will be the biggest offer of coal mines in India.