In a move to rationalise its operations and cost, Coal India has decided to close, reorganise or convert a majority of its existing mines which are either operationally or commercially unviable. And, has appointed the Indian School of Mines (ISM), Dhanbad, to give a report on this.
In this financial year, the government-owned behemoth will be shutting down 53 mines and opening new ones.
“We inherited many underground mines at the time of nationalisation (of coal, in 1971) when there were more than 700 mines. Now, we are trying to rationalise mines which are small and not financially viable. Some we are trying to amalgamate and to turn some into open-cast ones,” A K Jha, chairman, said after the company’s 44th annual general meeting.
ISM's report is expected in the coming six months. Jha said this “rationalisation” would not lead to job loss. Employees and workers in the affected mines would be relocated or given “new job roles”.
Last year, it had shut down 43 mines on the ground of commercial unviability or safety. Currently, Coal India has 369 mines, of which 26 are major ones which contribute around 60 per cent of total annual production.
Eleven coal blocks have been allotted to subsidiaries Eastern Coalfields, Bharat Coking Coal, Central Coalfields and Western Coalfields. These, said Jha, had the potential to produce more than 100 million tonnes (mt) annually in the near future. More, four mining projects with ultimate annual capacity of 24.6 mt and total capital investment of Rs 41.55 billion had been approved by the board of directors. Jha expects these blocks to start producing in two to three years. Jha's rationalisation of mines, said a senior official, would help the company maintain a competitive edge, at a time when the sector is being opened to others.
“In many cases, the mines we had inherited have legacy and safety issues and are not commercially viable. Unless fresh blocks are opened, scaling up production or achieving economies of scale might be quite challenging,” the executive said. The company's 'Vision 2030' document had suggested a focus on expansion of existing areas, not opting for new blocks. “In view of the likely demand, there is a limited requirement of starting new coal mines, except the ones already auctioned or allocated”, the document read. And, that it might be advisable to “monitor the growth in demand and decide on new mines accordingly”.
Coal India, with NLC and Singareni Collieries, the other two state-owned entities in the sector, have total capacity of 1,500 mt a year.