06-November-2024-Editorial

COAL INDIA LIMITED (CIL)

Coal India Limited (CIL) is a central government-owned company that plays a critical role in India’s coal mining and production sector. Established to manage and produce coal, CIL has grown to be the world’s largest coal producer, fulfilling a vital need in the country’s energy infrastructure.

Key Facts about Coal India Limited (CIL)

Establishment and Role

• CIL was founded in 1975, bringing together various nationalized coking and non-coking coal mines.
• The company operates under the Ministry of Coal and is headquartered in Kolkata, India.
• CIL holds a ‘Maharatna’ status, which grants it greater operational and financial autonomy.

Organizational Structure

• CIL operates through 8 subsidiaries, including major ones like Eastern Coalfields Limited (ECL) and Bharat Coking Coal Limited (BCCL).
• The largest coal-producing subsidiary of CIL is Mahanadi Coalfields Limited (MCL).

Strategic Importance

• CIL supplies nearly 78% of India’s total coal production, which supports over 50% of India’s power generation, primarily through coal-fired plants.
• Coal is responsible for fulfilling about 40% of India’s primary energy requirements.

Operations and Mining Capacity

• CIL manages over 313 active mines across 84 mining areas in 8 states.
• The company has made significant strides in renewable energy, announcing the development of a 50 MW solar power plant as part of its transition plan.

Historical Background of Coal Mining in India

Early Developments

• Coal mining in India began in 1774 by M/s Sumner and Heatly at the Raniganj Coalfield in West Bengal.
• This marked the start of coal mining in India, with the first use of coal for steam locomotives in 1853, spurring the demand for coal.

Post-Independence Initiatives

• The National Coal Development Corporation (NCDC) was founded in 1956 to systematically develop the coal industry in India.

Nationalization of Coal Mines

• In two phases, India’s coal industry was nationalized: first, the coking coal mines in 1971-72, followed by the nationalization of non-coking coal mines in 1973.
• The move was aimed at centralizing coal production and ensuring a steady supply to the energy sector.

Current Coal Production and Imports in India

Coal Production

• India produced 997.83 million tonnes (MT) of coal in 2023-24, with CIL contributing 773.81 MT. The company reported a 10.04% growth in production.

Coal Imports

• Despite high domestic production, India imports coal to meet demand, especially for non-coking coal. In 2022-23, India imported 237.668 MT of coal, up by 13.92% from the previous year.
• Key coal suppliers to India include Indonesia, Australia, Russia, and South Africa, among others.

Classification of Coal

Types of Coal

• Anthracite: Highest quality, with 80-95% carbon content. It is scarce in India, found mainly in Jammu and Kashmir.
• Bituminous: Contains 60-80% carbon and is widely found in Jharkhand, West Bengal, Odisha, Madhya Pradesh, and Chhattisgarh.
• Lignite: Lower in carbon (40-55%), this type of coal is found in regions like Assam, Rajasthan, and Tamil Nadu.
• Peat: The earliest form of coal, containing less than 40% carbon and having low calorific value.

Economic Significance of Coal in India

Energy Supply

• Coal is the backbone of India’s energy sector, especially for thermal power generation, which accounts for over half of the country’s electricity.
• Demand for coal is expected to rise to 1,462 MT by 2030 and 1,755 MT by 2047, highlighting its crucial role in meeting India’s growing energy needs.

Railway Freight Contribution

• Coal is the largest contributor to railway freight in India, responsible for nearly 49% of the total freight income, which is crucial for the railways’ financial stability.

Revenue Generation

• The coal industry generates over Rs. 70,000 crore annually for the central and state governments through taxes, royalties, and GST.
• The funds collected contribute to infrastructure and socio-economic development, particularly in coal-producing regions.

Employment

• The coal sector is a significant employer, providing direct and indirect jobs to over 2 lakh individuals in Coal India Ltd and its subsidiaries.
• Additionally, thousands of workers are employed in the industry’s contractual workforce.

Corporate Social Responsibility (CSR)

• CIL and other coal-sector PSUs invest in local communities, focusing on areas like healthcare, education, water supply, and skill development, improving the lives of people in coal-rich areas.

Challenges Faced by India’s Coal Sector

Environmental Concerns

• Air Pollution: Coal burning results in harmful emissions such as sulphur dioxide and nitrogen oxides, which contribute to acid rain, haze, and respiratory problems.
• Water Quality Issues: Mining activities affect nearby water bodies, leading to contamination with high levels of dissolved solids.
• Land Degradation: Open-cast mining leads to deforestation and loss of biodiversity.

High Production Costs

• The cost of coal production in India is relatively high (around Rs 1,500 per tonne), impacting the competitiveness of the sector.

Quality Issues

• A significant portion of domestic coal is of inferior quality, which affects the efficiency of power generation. Around 30-40% of the coal produced is non-coking, which is not ideal for many industrial uses.

Transition to Renewables

• India is pushing for a shift towards renewable energy sources, with a target of 500 GW of renewable capacity by 2030. However, the coal sector’s dominance creates challenges in achieving this goal.

Monopolistic Practices

• The coal industry’s nationalized structure, dominated by CIL, raises concerns about monopolistic practices, such as one-sided supply agreements and limited consumer choice.

Addressing Challenges in India’s Coal Sector

• Environmental Mitigation Strategies: Introducing technology like scrubbers and Flue Gas Desulfurization units can help reduce emissions. Water recycling and rainwater harvesting can mitigate the impact of mining on water resources.
• Encouraging Competition: Opening up the coal sector to private players can help improve competition, leading to better service delivery and pricing.
• Diversifying Investments: A clear roadmap for transitioning to renewable energy will ensure that growth in the coal sector does not hinder the development of clean energy sources.
• Improving Production Efficiency: Technological advancements in mining and production practices can help reduce production costs and improve coal quality.

By addressing these challenges and leveraging its strategic importance, India’s coal sector can continue to support the country’s energy needs while transitioning to a more sustainable future.