Coal India Ltd (CIL), the world's largest coal mining company and currently undertaking a Rs 15,000 crore (Rs 150 billion) Initial Public Offering (IPO), will have to deal with primary challenges involving output quality, sustainability and underground mining to remain on a robust growth path, said Chairman Partha S Bhattacharyya. The Kolkata-based mining company, which operates through eight subsidiary companies, will have to focus on realising better value for its produce by setting up more washeries, to market coal that is at par in quality with the commodity available in the international market.
While imported coal has a gross calorific value (GCV) in the range of 6,000 Kcal/kg and ash content between eight and 10 per cent, domestic coal has an average GCV of 3,500-4,000 Kcal/kg and ash content of 30-50 per cent.
"First, we have to basically ensure that the programme of setting-up washeries doesn't get into any roadblocks. That has to happen," Bhattacharyya told Business Standard, when asked about the three main challenges the firm faces.
CIL proposes to spend Rs 2,328 crore (Rs 23.28 billion) to establish 20 new washeries, apart from ensuring that most new projects have these built-in. The objective is to bring up the volume of washed coal to 40 per cent of total production by 2017, from about three per cent at present.
"We want to perform well in physical volume and financial consolidation. We also expect a price convergence, comparing to imported coal, by making washed coal of international standards. This will also mean that discounts (to domestic user industries) will lessen," he had said at a press conference earlier on Monday.
The state-run company, which controls reserves of 18,862.9 million tonnes, will also need to settle concerns over the environmental impact of its mining activities, which has already led to a standoff with the Union ministry of environment and forests (MoEF).
"Increasingly, we need to look into the sustainability issues more and more carefully, so that sustainability doesn't become a problem," Bhattacharyya said, alluding to the ongoing debate between the CIL, ministry of coal and MoEF over 'go' and 'no-go' areas.
The mining company has already expressed its reservations over MoEF demarcating certain areas as 'no-go' zones, that could have a significant impact on the availability of exploitable coal resources. More, CIL has stressed on its track record of afforestation for being given expedited access to areas with shrub and sparse forest coverage.
"And, number three, to bring in the best practices in mining, particularly in underground mining. In opencast (mining) we are fine, but in underground, better practices are needed. These are the three things," he said.
As one of the lowest cost coal producers in the world, CIL has been able to create an optimum situation at its open cast mines. However, since its underground mines continue to be expensive to operate, the company is now mulling closing small mines incapable of being mechanised and upgrading viable underground entities.
The cost of production from open cast mines at CIL is Rs 520 per tonne, while those of underground mines can go up to Rs 2,000 per tonne, Bhattacharyya had said during his presentation.
