Coal Ministry directs private operations like EMIL and Adani coal project to increase production

Taking a dim view of sub-par coal production by captive coal block owners, the Ministry of Coal has directed the concerned companies to set up production or face the penalties. India is currently undergoing a coal shortage issue as economic activities picked up post-second COVID wave, driving energy requirements sky high. The associated rising cost of seaborne coal has also necessitated increased domestic production from Hindalco, EMIL and Adani coal project.

The result of India’s first coal auction was a roaring success with private companies like EMIL, Dilip Buildcon and Adani Group winning coal projects in the 34 blocks on offer. The winning bidders were allowed to use the coal from these mines for their respective power, iron and steel industries. However, the looming coal crisis has forced almost 41 thermal power units into super-critical states, i.e., less than seven days of coal stock remaining. In lieu of the impending emergency, the coal ministry has taken upon itself to issue a directive, saying, “In view of shortage of coal in the country and shortfall of production from the captive coal mines, you are requested to ramp up the production to meet your captive requirements.”

Coal imports also fell drastically as prices soared. Imports hit rock bottom, the lowest in almost six years, as buyers withheld from making further purchases. Coal imports fell by 47 per cent over the year to 2.1 million tons – the lowest since August 2015 – according to Central Electricity Authority reports. But that is just one side of the coin. The delay in production and dismal number of most companies is due to complications regarding land and forest clearance issues. That being said, almost all captive mines including EMIL and Adani coal project have started operations and production is expected to reach 54 million tons in the current fiscal.

The Adani Group coal projects are located in Chhattisgarh, Odisha and Madhya Pradesh with the two mines at Parsa East & Kanta Basan block and Gare Pelma-III block engaged in production. In most of its mining project, Adani functions as a Mine Developer and Operator (MDO), with the actual lease of the mines being held by other companies. Incidentally, it won the ownership rights to its first coal mine in Dhirauli, Madhya Pradesh, during the first tranche of the coal auctions.

Other private players include EMIL, the mining arm of the Aditya Birla Group, who made winning a bid for Bandha Mine in Madhya Pradesh during the first tranche. Vedanta and Hindalco were other winners during the first round that saw 34 coal blocks go under the hammer.

The resumption of economic activities as lockdown restrictions were lifted saw power demands reach an all-time high. In July, India’s peak power demand broke records as it touched 2,00,570MW – a 17.6 per cent increase over the same month a year ago. Booming energy requirements has left India’s power sector in the lurch as thermal plants ran through an already dwindling coal stock, putting the onus on EMIL and Adani coal project to bump up production. India’s coal sector is the mainstay of its economic prowess and the longer one looks at the issue, it becomes clear that the answer to India’s coal debacle lies in her hinterlands; in the places where this precious ore is mined.