The Ministry of Coal has set an ambitious target of producing 186.63 million tonnes of coal exclusively from captive or commercial coal mines during the financial year 2024-25, which starts this April. This is a significant increase from the estimated production of 87.5 million tonnes in the current fiscal year and accounts for about 17% of the total projected coal production of 1,111.60 million tonnes in FY 2024-25.
The government had launched the auction process for 41 coal blocks for commercial mining in June 2020, a move that opened India’s coal sector for private players and ended the monopoly of state-owned Coal India Ltd. (CIL). The auction process was completed in November 2020, with 19 mines being successfully allocated to the highest bidders. The government also allotted 16 coal mines to state-owned entities for sale of coal under the provisions of the Coal Mines (Special Provisions) Act, 2015.
Progress and Challenges
Within three-and-a-half years of commencing commercial coal mines auction in 2020, six mines with a cumulative peak rated capacity (PRC) of 14.87 million tonnes have already started production . The government has also reviewed the status of the remaining mines and urged the allottees to expedite the development and production activities. The allottees have been facing various challenges such as land acquisition, forest clearance, environmental clearance, rehabilitation and resettlement issues, etc. The government has assured them of all possible support and facilitation to overcome these hurdles.
Benefits and Opportunities
The commercial mining of coal is expected to bring multiple benefits to the country, such as reducing the dependence on coal imports, saving foreign exchange, generating employment, enhancing competition, ensuring transparency, boosting industrial development and contributing to the socio-economic development of the coal-bearing regions. The commercial mining of coal is also expected to create new opportunities for entrepreneurs, investors and end-users in various sectors such as power, steel, cement, fertilizers, etc. The government has also introduced several reforms and incentives to attract more participation and investment in the coal sector, such as revenue-sharing model, flexible bidding parameters, performance security linked to PRC instead of bid amount, etc.
Future Outlook
The Ministry of Coal is confident of achieving the target of 186.63 million tonnes of coal production from captive or commercial coal mines in FY 2024-25, which will be a major milestone in the history of India’s coal sector. The ministry is also committed to ensuring that the commercial mining of coal is done in a responsible and sustainable manner, adhering to the highest standards of safety, environment and social responsibility. The ministry has also fixed a target of 1.31 billion tonnes of coal production for FY 2026-27 and 1.5 billion tonnes for FY 2030-31, which will further reduce India’s reliance on coal imports and enhance its energy security.