Coal India To Diversify Into Non-Coal Mining Areas In 2021
A freight train laden with coal stands on the tracks in Paradeep, India. (Photographer: Dhiraj Singh/Bloomberg)

Coal India To Diversify Into Non-Coal Mining Areas In 2021

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State-owned Coal India Ltd. is set to diversify into non-coal mining areas as well as make major investments in clean technology in 2021 after demand for the dry fuel remained muted for most of this year amid the coronavirus pandemic impacting economic activities.

Against all odds, including the slump in coal demand, the government opened up the country's mining sector for private players by auctioning 19 blocks.

Coal demand across the world is projected to fall by around 5% this year compared to 2019 while various sectoral challenges are expected to persist in 2021, analysts said.

“In 2021, we will try to get Coal India Ltd (CIL) to diversify into non-coal mining-related areas. It will make major investments in sectors other than coal mining so that it is well prepared to make the transition away from fossil fuel,” Coal Secretary Anil Kumar Jain told PTI.

Jain said Coal India will make investments in renewable energy, get into aluminium and clean coal technology among other areas.

In the coming year, Jain said Coal India is also likely to go ahead with its agenda of achieving one billion tonnes of production target by 2023-24.

“Coal India is getting approvals. It is gearing up to keep enhancing its production which was 603 million tonnes last year. It is taking upon itself bigger and bigger targets. It will be able to achieve one billion tonnes production target in 2023-24,” he said.

Noting that Coal India has taken upon itself an investment plan of Rs 2.5 lakh crore, Jain said that out of the proposed outlay, a significant chunk would be spend on clean coal technologies and diversification.

Also read: Coal India Likely To See Reforms In Marketing, Sales In 2021

“The rest of the investment will be to increase coal production,” he noted.

About 2020, Jain said that the auction of “commercial coal blocks was the number one achievement in the coal sector. We amended the Act to ease several things.”

The auction of coal blocks for commercial mining witnessed fierce competition and the 19 blocks that went under the hammer will generate total revenues worth around Rs 7,000 crore per annum and create more than 69,000 jobs once they are operationalised.

As many as 38 mines were put on auction, which also marked opening up of the country's coal sector to private players. The bidding also saw participation of players from sectors like pharma, real estate and infrastructure.

A total of 42 companies participated in the auction and 40 of them were private players. As many as 76 bids were received for 23 mines. Some of the large corporate groups that have bagged blocks include Adani Enterprises Ltd., Vedanta Ltd., Hindalco Industries Ltd. and Jindal Power Ltd..

Also read: Commercial Coal Mining: 19 Auctioned Blocks To Generate Rs 7,000 Crore Annual Revenue

The coal ministry took initiatives to re-visit old laws with an aim to improve efficiency, ease of doing business, and to open up coal sector to improve domestic coal production and reduce imports.

Noting that the creation of a sustainable development cell was another achievement of the coal ministry, Jain said it will ensure Coal India and other companies maintain environmental standards as well as that star rating of mines is done.

“Since coal mining is a core activity we do not want any slackening in our endeavour to maintain the highest environment standards,” the secretary said.

The Sustainable Development Cell aims to promote environmentally sustainable coal mining and address environmental concerns during the decommissioning or closure of mines. The cell also formulates policy framework for the environmental mitigation measures, including the mine closure fund.

The coal sector also faced rough weather in 2020 as fuel demand slumped due to sluggish economic activities in the wake of the coronavirus pandemic.

A coal ministry official who did not wish to be named said that almost all sectors of the country were hit due to the pandemic and the coal industry was no different. Sale of coal fell as the power sector, a major consumer of the dry fuel, saw a decline amid the lockdown, the official added.

Coal India Chairman Pramod Agarwal said the company is planning to produce 650-660 million tonnes of coal this financial year while production of 334 million tonnes was achieved till November.

Regarding coal demand in 2021, Jain said it will depend on many things, including movement of the economy.

Global coal consumption is estimated to have fallen 7%, or over 500 million tonnes, between 2018 and 2020. In 2019, global coal demand decreased 1.8% after two years of growth as power generation from coal weakened globally, including in India.

Analysts opined that there will be a modest rise in demand in 2021 and prices are also expected to firm up.

Coal demand is set to revive by 2021 in India and other Asian nations, including China, which are the major consumers of the fuel, Moody's Investors Service said in a report in October.

Coal use is anticipated to increase 3.8% in 2021. In the medium term (to 2025), India has one of the highest potentials to increase coal consumption as electricity demand rises and more steel and cement are required for infrastructure projects, as per the International Energy Agency.

Also read: Coal Sales to Rebound With First Gains in Years in U.S., Europe

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