PwC backs private role in coal mining - Quoted in the Business Standard

November 1, 2007: India needs private sector participation in coal mining to meet its surging demand for coal which is expected to touch around 730 million ton per annum (mtpa) by 2012, according to PricewaterhouseCoopers(PwC).
"Private sector participation is a must for augmenting coal production. The Centre has indeed made strides in this direction by allowing captive mining for various approved end usages. However, there is a need for streamlining the allocation process.
The last round of coal block allocation started in December 2006 and the formal letters of allocation are yet to be issued even though the steering committtee is believed to have submitted its recommendations", said Dipesh Dipu, principal consultant of PwC.
Domestic coal demand was expected to shoot up owing to planned thermal capacity addition of 78,577MW targeted by the Centre by 2012 including 10 ultra mega power projects, with coal demand projected at 730mtpa by 2012 including power generation demand of 550mtpa.
Apart from the power sector, the upcoming steel projects in the country will fuel the demand for cooking coal in the country, he felt.
At present, coal consumption in India was growing at about 6 per cent per annum, a growth rate higher than the US rate but lower than China.
India produced around 430mtpa of coal last year, or 92 per cent of demand.
Despite plentiful coal reserves, India's coal production was low compared to US, which produced 990 mtpa of coal in 2006-07, and China, whose output was 2.4 billion ton in the same period.
According to Dipu, domestic coal producers like Coal India Limited (CIL) needed to scale up production to meet the burgeoning demand.
"CIL is expected to achieve a coal production of 520mtpa by 2012 which is about 160mtpa more than what it produced in 2006-07. Captive coal mining is expected to produce about 120mtpa by 2012 which is four times current production. The remaining demand of 50mtpa of coal will be met through imports", he alleged.
However, there are concerns regarding the ability of CIL and private coal companies in meeting targets as progress in implementing new mining projects has been slow, Dipu added.
He hinted that procedural delays were causing slippages and increasing dependence on imports.
On the need to explore underground mining as an option to augment production, Dipu said, "The economics of underground mining are not so favourable as compared to the surface mining methods. The constraints are also low from the productivity perspective as coal production from underground mines has traditionally been low in India. However with environmental concerns being more and more important, it may be worthwhile to consider underground methods with mass production capacities."
He said underground mining was expected to reduce procedural delays, cause less environmental damage and lower land need for waste dumping.