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Coal: A vital resource

Thanks to the utility of coal and metallurgy and various power plants, coal continues to be a very strong driver in the economic development of any country.

Coal is very flexible in terms of its properties. Its various chemical and physical attributes vary in terms of its area of use. An average coal supplier tries to look for the specific type of coal that meets the needs of his current customer. For every different purpose, different types of coals are required. Coal goes through the process of beatification, where the coal particles low in ash are separated from the particles high in ash. By doing this, coal can be used according to its particular purposes and lead to better productivity.

As far as energy sources go in India, cola is a dominant one. More than half of India’s fuel requirements are met by coal itself. Most of the power as enjoyed by us is generated by coal production. Various heavy industries dedicated to serving the public make extensive use of coal. India ranks third in the global coal production industry. In spite of being a huge producer of coal, India only produces a little of it, to fulfill its own steel manufacturing needs.

Government’s moves to promote coal production

For as long as we can remember, the public sector has dominated coal industry in India. But now, the government is making many efforts to allow private mining and liberalize the whole thing. Captive mining will soon be possible, where some captive blocks of coal will be allocated to different private individuals. These individuals will majorly be the owners of power plans, steel manufacturing unites and producers of fertilizers.

Coal and its byproducts

  • Coal tar, which is a major byproduct of coal is an important resource for the production of coal gas. It is also used to produce many other chemical compounds which are in turn used for hundreds of other production process.
  • Carbon black is also a chemically rich, and highly commercial by products of coal. Carbon black, in itself, has a lot of demand among the manufacturing sector of our country. It is an important ingredient for the production of plastic and rubber products. It is a lot of diverse applications and thus, is produced in an extremely high volume.


India’s mining sector has been on the rise for a very long time. In the future as well, this field is expected to be touching new heights of profitability and growth. If only someone could find a sustainable and eco-friendly method of using coal for production, the scope of its marketing will become so much smoother. In any case, the industrial demand for coal is so huge, that its trade is unavoidable. Any person wanting to enter this market, will have the time of his life. The customer base is humongous, applications are in hundreds and even the government is making moves to promote its privatization. A healthy amount of capital and some business sense will do the trick.

Market Size

  1. India is the 3rd largest producer of coal. Coal production stood at 554.13 million tonnes in FY17 and 365.6 million tonnes in FY18 (up to November 2017). India has the 5th largest estimated coal reserves in the world, standing at 308.802 billion tonnes in FY16. In 2016, India contributed around 11 per cent of the world’s production of coal.
  2. India ranks 4th in terms of iron ore production globally. In FY17 and April-January 2017-18, production of iron ore stood at 192 million tonnes and 126.056 million tonnes, respectively. India has around 8 per cent of world’s deposits of iron ore.
  3. India has become the 3rd largest steel producer in FY17 with the production of finished steel at 83.01 million tonnes. India stood as the 3rd largest crude steel producer in 2016, while its production increased to 97.385 million tonnes in FY17 as compared to 90 million tonnes in FY16. Crude steel production from April to January 2017-18 stood at 84.4 million tonnes.
  4. According to Ministry of Mines, India has the 7th largest bauxite reserves- around 2,908.85 million tonnes in FY17. Aluminium production stood at 1.7 million metric tonnes in FY17.
  5. India has vast mineral potential with mining leases granted for longer durations of 20 to 30 years.
  6. Coal-based power generation capacity in India, which currently stands at 192 GW is expected to reach 330-441 GW by 2040, according to Mr Gopal Singh, CMD, Coal India Limited.

Investments/ Developments

  1. Cumulative FDI inflows into the mining sector between April 2000 and December 2017 stood at US$ 14.005 billion as per Department of Industrial Policy and Promotion (DIPP).
  2. Vedanta Resources Plc is planning to invest around US$ 9 billion in India and create more than a million direct or indirect jobs in the country.
  3. Metals and Minerals Trading Corporation of India (MMTC) Ltd is in talks with the National Mineral Development Corporation (NMDC) to sign a new five-year pact for exporting 2.6 million tonnes of iron to Japan and South Korean industries.
  4. Under the Mines and Minerals (Development and Regulation) Act of 1957, FDI upto 100% under Automatic route is allowed for the mining and exploration of metal and non- metal ores including diamond, gold, silver and precious ores, while FDI upto 100% under Government route is allowed in for mining and mineral separation of titanium bearing minerals and its ores.
  5. The Government of India is taking steps boost the country’s domestic steel sector and raise its capacity to 300 million tonnes (MT) by 2030-31.

Government Initiatives

  1. In February 2018, Government of India approved the methodology for auction of coal mines. Auction held under this methodology will be ascending forward auctions with the bid parameter being rupees paid to the state government per tonne of actual production. Also, there will be no restriction on sale or utilization of coal.
  2. In August 2017, Ministry of Mines constituted a committee to revisit National Mineral Policy 2008 and announce a fresh and more effective, meaningful and implementable policy. Comments were invited from the general public and other entities concerned in January 2018.
  3. ‘Grahak Sadak Koyla Vitaran App’ has been launched by Mr Piyush Goyal, Minister of Railways and Coal, which will benefit customers of Coal India Limited (CIL) lifting coal through road mode.
  4. The Ministry of Environment, Forest and Climate Change (MoEFCC), Government of India, has eased the guidelines for mining of critical atomic minerals such as uranium or titanium in the Coastal Regulation Zone (CRZ) areas.
  5. The reduction in local and inter-state tax rates after implementation of Goods and Services Tax (GST) is expected to result in savings of Rs 6,000 crore (US$ 937.77 million) for customers of Coal India which include NTPC, Korba State Power Houses of Gujarat, Rajasthan and Chhattisgarh and other State Electricity Boards along with private consumers like Adani, Lanco & Balco etc. while increased production in previous three years has saved the country Rs 25,900 crore (US$ 4.05 billion) in foreign exchange by reduction in imports.
  6. Shri Piyush Goyal, the Union Minister of State for Power, Coal, New & Renewable Energy and Mines, launched the Mining Surveillance System (MSS) in New Delhi to establish a regime of responsive mineral administration by curbing instances of illegal mining activity though automatic remote sensing detection technology.
  7. National Steel Policy has been established in 2017 with the mission to provide self- sufficiency in steel production by providing policy support and guidance to private manufacturers, MSME steel producers, CPSEs and encouraging capacity additions.
  8. The Odisha government has been granting leases for longer durations of 20 to 30 years due to which India has seen a significant growth in minerals.
  9. The Government also provides fiscal incentives to companies such as one-tenth of the expenditure on prospecting, extraction and production of certain minerals during five years ending with the first year of commercial production is allowed as a deduction from the total income.
  10. In captive mining for coal, companies are permitted to set up coal processing plants such as washeries that are for specified end uses, including the setting up of power plants, fertilizers and steel units.