Coal India Limited to diversify into non-coal areas from 2021

The coal sector faced rough weather in 2020

State-owned Coal India Ltd (CIL) 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 five per cent 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 (CIL) will make major investments in sectors other than coal mining so that it is well prepared to make the transition away from fossil fuel.

"So, it (CIL) will make investments in renewable energy, get into aluminium and clean coal technology and will do a lot," Coal Secretary Anil Kumar Jain told PTI.

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

CIL may also "go ahead with one billion tonnes agenda. It is getting approvals. It is gearing up to keep enhancing its production which was 603 million tonnes last year. It is taking upon itself a bigger and bigger target. It will be able to achieve one billion tonnes (production target) in 2023-24," he said.

Noting that CIL 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 spent on clean coal technologies and diversification.

"The rest of it (the investment will be) to increase coal production," he noted.

About 2020, Jain said that auction of "commercial coal blocks was 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 of 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, Vedanta, Hindalco Industries and Jindal Power.

According to the secretary, the government facilitated the mining plan and made it eco-friendly to promote ease of business.

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.

Prior to amendments in the mining law, there was dominance of public sector companies both in exploration and mining of coal.

The Mineral Concession Rule, 1960 was governing many aspects of coal mining and required amendment in furthering the coal sector reforms.

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

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

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.

CIL 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 per cent, or over 500 million tonnes, between 2018 and 2020. In 2019, global coal demand decreased 1.8 per cent 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 per cent 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 said.