Coal India, coal blocks, and captive mining

In addition to the production from existing mines and projects, the CIL (Coal India Ltd) had identified 289 coal blocks (out of a total of 499 blocks), to enable it to reach a production level of about 500 MT (million tonnes) by the year 2011/12 and to continue at the same level till 2036/37. Of the remaining 210 blocks, 136 were listed as 'captive blocks' and 74 were termed 'non-CIL' blocks.

The CIL produced 343.4 MT from the existing mines and projects in the year 2005/06. To achieve the production level of 500 MT, the balance 157 MT was supposed to come from the reserved blocks, which need to be projectized from now till 20011/12. However, the CIL would need to continue extra capacity creation to meet the deficit caused by older mines getting exhausted during the period to remain at the 500-MT level. Further, if the much-ambitious plan of producing 782 MT by 2025 is to be met, it would need much more in addition to over-exploitation of its existing mines and projects (thus shortening their lives).

While the coal blocks other than the CIL blocks had very low proved resources, the CIL blocks consisted largely of proved resources. Since the production from the captive blocks allotted earlier was not enough to meet the demand-supply gap, it was proposed that some coal blocks reserved by the CIL with a larger share of proved resources should be made available for captive mining. While the expert committee on coal sector reforms recommended that the CIL should be permitted to keep only those blocks that it may need to meet its requirement till 2026/27, the finance minister, during his budget proposal of 2006/07, had earlier proposed a shorter timeframe of 2011/12.

Now that the government has decided to allot 109 coal blocks for captive mining from the kitty of the CIL, these blocks could be projectized immediately and could contribute to national production much before it was earlier envisaged. This will, no doubt, help in reducing the ever-increasing gap between demand and supply.

The moot question now is whether the CIL can ever reach even 500 MT of coal production by 2011/12 and maintain it thereafter, let alone achieve a production level of 782 MT, once the 109 blocks are taken out of its kitty.

Editorial