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Coal India (CIL) cleared three projects with a total production capacity of 40 million tonnes and requiring a combined investment of about Rs 5,900 crore at a board meeting last week. These mines are expected to start production in a few years and will add to the company's target of achieving 1 billion tonnes in output by 2020.
One of projects is the Rs 3,600-crore, Lakhanpur-Belpahar-Lilari, 30 million tonnes (mt) integrated open cast mine in Odisha under Mahanadi Coalfields. Then there's the Rs 1,550-crore, Rampur-Batura (new mine), 4 mt project under South Eastern Coalfields. The third project is the Rs 750-crore, Yekona 1 & 2 amalgamate, a 2.75 mt open cast mine under Western Coalfields.
However, in the absence of the requisite number of independent directors on the Coal India board, all clearances are only for a year and need to be renewed annually after that until production starts in an estimated two years.
Coal India plans to spend a total Rs 10,600 crore in FY16 on enhancing its coal production capacity and ramping up infrastructure. In FY15, Coal India spent Rs 5,173 crore on its projects against a targeted investment of Rs 5,225 crore for the year.
Producing more coal is essential for fueling India's utilities and meeting much-needed power demand but prices have dropped globally amid the widespread decline in commodities. Also, interest in the fuel is on the wane because of environmental concerns and the rising adoption of renewable sources of energy.
According to documents released by CIL, the company will invest Rs 6,000 crore in ramping up existing capacity and taking up new projects that will help achieve its 1 billion tonne target by 2020. Of this, 908 mt has been firmed up and the rest is being charted.
The company has realised that investing in rail infrastructure is the only way to push supplies from areas not currently accessible. It's planning to invest close to Rs 4,150 crore in various infrastructure projects, including railway lines. Meeting the target involves a joint effort with coal-bearing states and the Railways to access resources and speed up logistics for moving the fuel. Coal India's existing mines are envisaged to contribute about 165 mt, projects under implementation are likely to contribute 561 mt and those in the future are to produce 182 mt by FY20.
Major challenges include three critical railway lines and introducing mechanization besides upgrading labour skills, land acquisition and getting environment, forest and other approvals in time.
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