Road blocks to coal
As discussed in my previous post about the sorrow plight of Indian Coal Sector. The demand supply gap of Indian Domestic sector is increasing with each succeeding year (161MT ;2011-12). Under the umbrella of this mismatch between demand supply of Indigenous coal sector ,various recommendations have been put forward which can be summarized as:
Innovation and Technology:
- 1.Increase in Coal Production :Today, as the world has already started looking after a ‘sustainable practice’, in any domain and industrial and commercial practices, we really need to start assessing our potential and compare practices in the country vis-a-vis the other parts of the world which are more advanced in the sector. There can be 4 major advantages with the advent of new technology like Higher returns(IRR),Lower environmental degradation, lower per tonne of ore cost and higher production realization. An example of innovation in coal mining is moving from smaller capacity shovel to bucket sizes of even 25-30cu m capacities depending on factors like mine geology, size of mine etc. having digging capacities of the order of 11,000 MT/hr.
- Effective exploitation of resources: Evaluation of mineral resources required typical geological models and various geological technologies and the prospect of getting coal reserves in those particular areas is heavily dependent on the extracted data. As on April 2011
Total coal resource: Proved -114001.60,Indicated- 137471.10,Inferred- 34389.51, Total – 285862.21 .
Due to various limitations of the renewable sector, there is a need to tap our huge coal reserves. As far coal mining is concerned ,most of the mining practices are Open case mines(around 90%) as compared to Under ground mining thereby leading the drop in net coal production in some areas where the coal seam in as below as 90-100KM.Some of the prominent steps that can lead to increase in coal production are Use of proper and scientifically proven mining technology, Adopting the correct mining method (OCM/Long wall/other variants), Combining smaller mining areas to develop these into one single mine of large capacities, Promoting mining industries to have a maximum level of extraction by giving them incentives/tax rebates, Close monitoring by our government agencies in each mining project to crosscheck,the progress of each mining project in terms of percentage extraction,Meeting targets of mining projects not only in terms of production (per annum),but also on per annum level of extraction to match with the overall mineable reserves of a mining project.
3. Coal Quality Improvements : Indian Coal is characterized by high ash content, low sulphur,low moisture content. Lower washeability index, lower liberalization size. Due to these peculiar problems in Indian coal, there comes the need to go for importing of coal. CFRI(Central Fuel Research Institute,Dhanbad) has proposed some of the methods to improve wash ability index of the coal like improved froth floatation process, oil agglomeration process, oleo floatation process.(http://eprints.nmlindia.org/5887/1/Chap_9.PDF)
4. Improving Infrastructure and transport: One of the major issues being faced by the industry for the coal movement within India is transportation and infrastructure. Following are the major challenges being faced in coal transportation:
-Lack of availability of proper transportation mode for produced coal
• Mismatch between the demand and supply of railway wagons
• Lack of infrastructure to support a coal movement at full capacities
Some of the steps to improve the transport facilities and infrastructural requirements in order to compliment the coal industry rather than hamper its progress are as follows:
• Enhanced road connectivity across mineral zones and consumers
• Infrastructure developments driven by PPP
• Restructuring and/or reallocation of railway networks to connect with the coal
• Doubling of railway routes at places where coal movement is higher
• Enhancing port capacities as well as evacuation efficiency and augmenting the
existing capacities from existing ports.
Policies and Regulations: Without relevant policies measures and regulations every step will be of no use. Government has recommended various policy measures in its report of Coal Competitiveness and they can be summarized as follows:
- Auction of Coal licenses/ non coal minerals through competitive bidding and thereby leading to a boost In investor confidence.
- MMDR Bill 2011 guaranteed annuity of 26 % to the local population, thereby increasing the inclusion of host population in the mining process in particular area.
- Drafting of national sustainable energy framework for mining areas.
- Thrust on exploration on mineral resources by AMD, GSI, CMPDIL and MECL and classification of mineral resources as per the United Nations Framework Classification (UNFC) code.
- Setting up of coal regulatory authority that will act as watch dog for coal pricing mechanism in India.
- Single window clearance mechanism for taking the clearance such environment, land etc.
Above mentioned recommendations and policy regulations if implemented with proper strategy will ultimately transform India from Coal Importer country to Coal Exporter Country in the near future.
References : Report of Indian Chambers of Commerce,MoP,Newspaper Abstracts etc.
Globally, coal resources have been estimated at over 861 billion tonne.While India accounts for 286 billion tonne of coal resources (as on 31 March 2011), other countries with major chunk of resources are USA, China, Australia, Indonesia, South Africa and Mozambique.Coal meets around 30.3% of the global primary energy needs and generates 42% of the world’s electricity.India has the fifth largest coal reserves in the world. Of the total reserves, nearly 88% are non-coking coal reserves, while tertiary coals reserves account for a meager 0.5 % and the balance is coking coal. The Indian coal is characterised by its high ash content (45%) and low sulphur content.The power sector is the largest consumer of coal followed by the iron and steel and cement segments.
Some Facts about Coal Generation:
At the end of September 2012, 35 coal-based power plants had less than seven days of
coal stocks . This was due to the following:
Twenty-two of these occurrences is due to no, inadequate or delayed receipt from Coal India or one of its subsidiary firms.
Ten of these instances are due to plants running at above-planned PLFs.
Five instances are due to inadequate import of coal.
Similarly, for the first half of 2012-13, the average PLF of coal-based plants has been 68.27%, as opposed to 71.20% for the same period a year ago. Approximately 12.3 BU of generation shortfall in this period is directly attributable to the shortage of coal.
Some of the broader aspects of the Coal Sector can be listed as follows:
Operational and Sustenance Issues:
- Issues relating to fund raising for various coal projects in rural and semi urban areas, and this can be primarily cited as monopolization of the CIL in the sector which is barring the private sector investment in the sector
- Issue related to performance of mining activities in India as most of the mining that is done in India is Open Cast Mining(http://en.wikipedia.org/wiki/Open-pit_mining) instead of Underground Mining(http://en.wikipedia.org/wiki/Coal_mining)
- Private sector investment is also underdeveloped as there is not a detailed classification of various minerals according to UNFC(http://ibm.nic.in/unfc.pdf).
2. Key Administrative Issues:
- Long queue of Mining applications are lying at various levels of state and center levels thereby creating roadblocks in the path of adequate mining.
- There has been a proposal for Single Window Clearance Agency(SWCA) that will root out the so called “red tapism” in various governmental procedures.
- There have been a case of multiple registration counters/mechanisms for traders,miners,developers thereby making the final target a blurred one to be achieved in a target time.
3. Regulatory Issues: According to mine developers there are many loopholes in the policy regimes and regulatory issues regarding mining of natural resources.Prominent ones may be listed as follows:
- There is a lack of incentive mechanism in the mining sector-recommendation will be like to extend performance based incentive as has been laid down in NELP policies.
- There has been lack of policy support in transfer of mining licenses.The mine owners are not able to mine scientifically while complying to all the environmental norms and would like to dispose off these areas or develop them through forming a joint venture.States may allow this move in order to increase the production capability of the state mining companies.
The government must strictly adhere to timelines as per the MMDR act and MCR, and extension should be granted only on genuine cases as permitted under law.
4.Fiscal Issues: There have been really poor connectivity issues between the mining areas and moreover the evacuation facilities are also having a downsizing trend.
5. Infrastructural Issues: Cadastral (Khasra) maps are either not digitized or the geo referencing has not been done properly. This creates problems in lease boundary determination, thus hampering genuine miners. As a recommendation states may appoint a nodal agency to undertake these prefeasibility studies and thereby indicating the authenticity of data too.
These are some basic issues that are needed to be tackled by Indian Power Sector at the earliest and thereby making it a efficient coal production nation. Various recommendations about the problems will be taken up in the subsequent posts.
References: Indian Chambers of Commerce, MoP, CEA etc