Coal India

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Coal India is the government-owned coal mining company.

The World Coal Institute states that "almost all of India's 565 [coal] mines are operated by Coal India and its subsidiaries, which account for about 86% of the country's coal production. Current policy allows private mines only if they are ‘captive' operations, i.e. they feed a power plant or factory. Most of the coal production in India comes from opencast mining, contributing over 83% of the total production. Coal India employs some 460,000 people and is one of the largest five companies in India."[1]

Coal India reports that its annual coal production has grown from 79 million tonnes in 1975 to 360.9 million tonnes in 2006-2007.[2] Coal India produced 431.3 million tons in 2010, accounting for 81 percent of the nation’s output, according to its annual report. In September 2011, Coal India said it plans to use its $9.2 billion of cash to increase output and pay more dividends to investors, spending 370 billion rupees ($7.5 billion) to raise annual production by 250 million metric tons by 2017.[3]

Major Coal Mining Subsidiaries

On its website Coal India Limited (CIL) states that it operates as a holding company with seven wholly owned coal producing subsidiary companies. These are:[4]

It also lists North Eastern Coalfields as a "small coal producing unit operating in Margherita, Assam is under direct operational control of CIL."[4]

Domestic coal mines

Coal India accounts for over 85% of domestic coal production, and recorded an output of 431 million tonnes in fiscal year 2010. CIL operates 470 mines, including 164 open cast, 275 underground and 31 mixed mines.[5]

It was reported in July 2012 that the ministry of environment and forest gave conditional approval to 15 mines operated by PSU coal miner Coal India.[6]

Potential mine closures

Due to environmental concerns, in August 2011, the pollution control board of Jharkhand state in the eastern part of India ordered the closure of 22 open cast mines operated by India Coal subsidiary Bharat Coking Coal Limited: Phularitarh, Muraidih, Shatabdi, Govindpur, Gajlitarh, Mudidih, Tetulmari, Senara, Bansjora, Gondudih Khas, Khushanda, Ginagarha, Bahra South, Gopalichak, Murlidih, Dahibari and Bahra North. Bharat Coking has as many as 69 coal mines in the state and made major technological changes to enhance coal production which, according to the state pollution control board, violated green norms. Some mines in Jharia belong to a subsidiary of Bharat Coking Coal and account for a fifth of output. After an appeal by Bharat, who said the closure would affect other business like Steel Authority of India, the Jharkhand court ordered a status quo till August 30, 2011. The closure action, if initiated, would have resulted in a production loss of 40,000 tonnes per day. Out of Coal India's 2010-11 production of 424.50 million tonnes, Bharat Coking contributed 29.29 million tonnes.[7]

CIL operating mines without clearance

On September 7, 2011, India's accounting watchdog - Comptroller and Auditor General (CAG) - said state-run Coal India is running 239 mines in its seven coal producing subsidiaries without environment clearances, including 48 open cast mines, 170 underground mines, and 21 combined mines. CIL management said that production was increased to meet the energy needs of the country, including supply crisis in power plants, and to make up for the shortfall in production in some collieries.[8]

Imports

In July 2012 Coal India reported that they planned to import up to 30 million metric tons of coal in 2012 in order to meet rising domestic demand and mitigate power shortages.[9]

Proposed projects

Environment Minister approves sixteen coal projects

On February 11, 2011 India's Environment Minister Jairam Ramesh approved a total of sixteen new coal projects that were on hold due to environmental regulations. Coal Minister Sriprakash Jaiswal stated that the environment minister’s okay of Coal India's proposed coal mine projects was due to pressure from higher levels in the Indian government. The Coal Minister also stated that environmental regulations are one of the reasons why the growth of Coal India – which produces 80 percent of the country's coal – dropped to 2 percent in 2010, compared to 2009's figure of almost 7 percent. However, the Coal Minister said the areas off limits to coal mining would remain off limits, despite the likely increase in the country's coal use.[10]

On March 10, 2011, Coal Minister Sriprakash Jaiswal said his ministry had received environment clearance in writing for 14 Coal India projects. Elaborating on the project, an official with the ministry said of the 14 projects, five are from Mahanadi Coalfields Limited and three each from Eastern Coalfields Limited and Western Coalfields Limited. Two are from Bharat Coking Coal Limited, and one is from South Eastern Coalfields Limited.[11]

Coal India identifies 142 possible coal projects

In April 2011 it was reported that Coal India and the U.S. are considering encouraging equity partnerships with offtake in expansion projects, long term offtake arrangement and equity in new projects. Coal India has identified 142 new projects, comprising 35 under ground and 107 opencast, for ultimate capacity of 380.22 million tonnes, with an estimated capex of $7.7 billion. The alliance, they said, is crucial to tackling reserve constraints in India's exploration of coal.[12]

Overseas coal mines

In August 2011, an India Parliamentary Panel asked the coal ministry to fast-track the acquisition and tendering process by Coal India (CIL) of coal mines overseas, such as Australia, USA, South Africa,and Indonesia, and asked the government to constitute a CIL "dedicated team" to expedite the process of dry fuel production from overseas mines. CIL has earmarked Rs 6,000 crore for acquisition of mines abroad.[13]

Coal India in Discussions with U.S. Companies

It was announced in November 2011 that Coal India was in talks with Peabody Energy and Massey Energy about acquiring two of the companies' mines. Coal India has budgeted $1.2 billion to buy assets in the U.S., Indonesia and Australia during the year ending March 2011 as it battles a widening gap between domestic coal supply and demand.[14]

In May 2011, Coal India said it wanted to buy a stake in Massey Energy Co.'s Sidney Underground Mines, and is awaiting a response from the U.S.-based company's new management on the potential deal. Talks on the deal stopped after Massey reached a $7.1 billion cash-and-stock deal in January 2011 to be acquired by Alpha Natural Resources. Some environmental issues related to the operations of the underground mine also led to the halt in discussions. As of end 2007, Sidney Underground Mines had proven and probable coal reserves of 73.06 million tons and 54 million tons, respectively, according to Massey's website. In addition to Massey Energy, Coal India is in talks on buying stakes in coal mines, among others, with Peabody Energy Corp. and Indonesia's PT Golden Energy Mines. For now, its only overseas reserves are two coal blocks in Mozambique.[15]

Mozambique

In January 2011, it was reported that Coal India plans to import 10 million metric tons of the fuel from Mozambique in the next five years, where the company has prospecting rights to two blocks in the northwest of the country measuring 225 square kilometers (87 square miles). If viable deposits are found, the company intends to invest $400 million and employ 3,000 people to extract them. Coal India also wants to secure rights in five other exploration blocks, and export the coal to India through the port of Beira and perhaps - after 25 years - the Nacala port.[16]

In August 2012 it was reported that Coal India had set aside 350 billion rupees ($6.4 billion) to acquire coal assets abroad and to "develop" its two coal blocks in Mozambique."[17]

Indonesia

Coal India has been in discussions with Indonesia’s Golden Energy Mines for a possible 30% stake purchase in its assets.[18]

South Africa

In January 2012, Coal India said it will sign an agreement with the Limpopo government in South Africa to receive mining rights on various coal blocks in that province. The mines will be developed in partnership with the government of Limpopo which, through a state-controlled corporation, will retain a 26% interest in the mines.[19]

Coal terminal

According to a July 2010 company statement, Coal India plans to invest in its first port terminal to handle imports to help meet increasing demand for the fuel. The company intends to build a terminal in a venture with Visakhapatnam Port Trust in southeast India by 2013 with a capacity to import as much as 6 million metric tons annually. Coal India also intends to form a joint venture with NTPC, Asia’s second-largest power utility by value, to buy the fuel from overseas.[20]

Coal India to use GPS to stop pilferage

It was announced in November 2011 that Coal India would use satellite technology to prevent shipments from being hijacked amid a shortage that has hit supplies to thermal power projects in the country. It is estimated that at least a quarter of 431 million tonnes of coal was stolen in transit.[21]

Going public

In the largest ever initial public offering on the Indian stock exchange, Coal India offered 10% of its shares to investors at home and abroad in November 2010. Coal India's prospectus, crafted with the help of big-name investment banks, did not mention climate change once in its 510 pages. Investors responded, and the offering was oversubscribed 15 fold, with the stock soaring on the first day of trading, November 4, valuing Coal India at $49 billion. Those ending up owning stock included 484 foreign funds, 195 mutual funds, 44 insurance companies, and many banks. Many of these investors were using ordinary citizens' money - people mostly allowed no say in where their pension funds, insurance premiums, and banking deposits are invested.[22]

Major financiers

The 2011 report, "Bankrolling Climate Change: A Look into the Portfolios of the World’s Largest Banks" by Earthlife Africa Johannesburg and BankTrack, researched the coal financing of 93 large banks and found that 24 were involved in financing Coal India, providing the company with over 1.8 billion Euro from 2005-2011. The top financiers of Coal India were Deutsche Bank, Bank of America, Citibank, Morgan Stanley, and Goldman Sachs.[23]

Reports

Reserves

The 2013 Institute for Energy Economics and Financial Analysis (IEEFA) report, "Coal India: Running on empty?" notes that, in 2001, "the State of India abandoned the standards used by Coal India Limited (CIL) to derive its estimates. There remains significant uncertainty about the true extent of CIL’s extractable reserves." Citing company mark-downs in its coal reserves, and repeated inabilities to meet production targets, the report argues that "[a]t targeted growth rates, CIL’s extractable coal reserves could be exhausted within 17 years. This is within the lifetime of Indian power plants recently constructed, and those currently under construction/approval. India has 90,000 MW of power plants (predominantly coal) under construction and aims to add another 69,000 MW of coal-fired power by 2017." The report argues this means CIL will either have to expand its exploration funding for more difficult to access coal, or rely upon costly coal imports.

Contact details

10 Netaji Subhas Rd, Kolkata,
W.B-700001, India
Phone: 033-2248-8099
Phone: 033-2243-5147
Fax: 033-2243-5316
Email: telecil AT cal2.vsnl.net.in and cil AT wb.nic.in
Website: http://www.coalindia.in/default.aspx?AspxAutoDetectCookieSupport=1

Articles and Resources

Sources

  1. "India", World Coal Institute, undated, accessed June 2008.
  2. Coal India, "Raw Coal Production", Coal India website, accessed June 2008.
  3. Rajesh Kumar Singh, "Coal India to Use $9.2 billion Cash to Increase Output, Dividend" Bloomberg, Sep. 22, 2011.
  4. 4.0 4.1 "About Us", Coal India website, accessed February 2012.
  5. "CIL operates 239 mines without environmental clearance: CAG" NBC, Sep 07, 2011.
  6. "15 Coal India mines may get conditional green ministry nod" Raj Kumar Sahu, NDTV, July 30, 2012.
  7. Shivom Seth, "Coal mines in India, China face closure" Mine Web, Aug. 26, 2011.
  8. "CIL operates 239 mines without environmental clearance: CAG" NBC, Sep 07, 2011.
  9. "Coal India May Import Up to 30 Million Tons This Year" Saurabh Chaturvedi, Wall Street Journal, June 11, 2012.
  10. "Coal Minister speaks on Jairam's green nod to 16 coal projects" NDTV.com, February, 15, 2011.
  11. "Written clearance for CILs 14 projects: Jaiswal" The Economic Times, March 10, 2011.
  12. Sanjay Jog, "India, US pursue sustainable alliance in coal sector" Business Standard, April 16, 2011.
  13. "Parliamentary panel asks CoalMin to expedite acquisition abroad by CIL" The Economic Times, Aug. 21, 2011.
  14. "Coal India in talks for Peabody, Massey mines" Erika Kinetz, Forbes.com, November 12, 2010.
  15. Saurabh Chaturvedi, "Coal India Eyes Massey's Sidney Mines" Wall Street Journal, May 27, 2011.
  16. "Coal India to Import 10 Million Tons of Coal From Mozambique Over 5 Years" Bloomberg, Jan. 9, 2011.
  17. Rakesh Sharma, "Coal India Sets Aside $6.4 Billion for Acquisitions, Mozambique Blocks," Dow Jones Newswires, August 23, 2012.
  18. "Coal India seeks govt nod for 30% stake in Indonesian mine" Business Standard, July 26, 2011.
  19. Jan de Lange, "Indian coal giant buys SA rights" fin24.com, January 8, 2012.
  20. "Coal India to plan first terminal for imports" Infodrive, July 22, 2010.
  21. "Coal India to use GPS to stop pilferage" Ruchira Singh & Utpal Bhaskar, LiveMint.com, November 7, 2011.
  22. Jeremy Leggett, "Coal India IPO shows the mountain we have to climb" The Guardian, Nov. 9, 2010.
  23. "Bankrolling Climate Change: A Look into the Portfolios of the World’s Largest Banks" Earthlife Africa Johannesburg and BankTrack, 2011.

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