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Coal Minister Piyush Goyal is not satisfied with the robust growth in Coal India Ltd (CIL) production of 10% until October. He wants more to meet the demand. But if the indications are good, CIL will struggle to maintain its level of production even next year.
The problem lies in open pit mines, which account for 94 to 95% of CIL production. Until October, open-pit production had increased by 11%, a record. But the elimination of overload, a key element of open pit mining, decreased by 3.4%, which means that the joints are not exposed enough for future production.
The trend was evident in the first quarter, when the elimination of the OB was marginal.
In India, the open-cast method requires an average of 1.8 tonnes of land to produce 1 tonne of fuel. With the depletion of the shallower seams, this ratio increases every year.
For coal mining to be sustainable, it is therefore imperative that the production and OB rates remain the same. What is worrying now is that the removal of OBs is down in four out of seven CIL group subsidiaries.
Of the three main subsidiaries of the CIL Group, accounting for more than 70% of production, South Eastern Coalfields (SECL), based in Chhattisgarh, reported a slight 2.6% decline in OBs, compared to 17% growth in open pit production. Northern Coalfields (NCL), based in Madhya Pradesh, recorded a 12% growth in production, but OBs shrank by 9%. In the Mahanadi Coalfields (MCL), located in Odisha, production was stagnant, but the removal of the land decreased by 6.5%.
MCL suffers from a lack of available land, which is indicative of its performance in composite materials (production and OB). Open pit production is essentially a factor of land availability, which is difficult in Odisha, both because of the state government's rules and sociopolitical volatility. The territorial war between the ruling BJD and the BJP aggravated the situation.
Little resistance
But the NCL does not have any excuses of this type as it faces the slightest resistance for land acquisition. It simply has not managed to manage the contracts, as shown by the 14% drop in hiring activity.
Things would have been worse if NCL had not managed 40% of its business using its own computer and computer – cf. "Departmental" in business language – up 7.6%.
A closer look at the data reveals that all of the subsidiaries, except for Eastern Coalfields (ECL) and Central Coalfields (CCL), had high performance of the contract management problems leading to a decline in the activity of OB hired. CIL President AK Jha was not available for comment, but sources in the company blame the fiasco for the reverse mechanism of action, made mandatory by the government.
The situation is "unprecedented". Industry sources expect society to slow production to more sustainable levels to avoid disasters. The fear is that to maintain growth in the current situation, the company could resort to an insecure mining activity.
However, there may not be many takers for such advice at this stage. While captive production has declined considerably after the coal auction in 2015, India relies on the CIL like never before.
On the day of the recent CIL founding, Mr. Goyal urged the company to increase its daily production by about 40 percent from about 1.75 million tonnes to 2.5 million tonnes
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