Home >Energy Sectors >Coal

Coal and lignite


The Indian coal industry was nationalized in the early 1970s. While the production of coal increased from 70 MT (million tonnes) at the time of nationalization to 382 MT in 2004/05; the national coal industry has always been producing less coal than the actual demand leading to a shortage situation. The situation became more serious as emphasis increased on coal based power plants in last few years. The shortages led to backing down of many power plants. Loss of generation due to short supply of coal during the year 2004/05 was estimated at 3 588 million units. The MoC (Ministry of Coal) advised state electricity boards to import 10 MT coal during 2005/06 for meeting shortages at 16 distant power stations. Even the NTPC (National Thermal Power Corporation Ltd) is importing coal for some of its pithead stations. Sourcing coal from abroad was a costly option for the consumers as the market remained overheated due to the sudden spurt in the demand from China last year.

Against a projected demand of 405.1 MT by the Planning Commission, indigenous coal supply in 2004/05 was 387.2 MT. This was 8.8% more than the previous year?s figure of 355.7 MT, leaving a projected gap of 18 MT between demand and indigenous supply. However, even after imports of 25.3 MT coal in 2004/05 the shortages persisted. A shortage of 55 MT is anticipated at the terminal year of the Tenth Five-year Plan (2006/07) against a demand of 460.5 MT and the estimated indigenous coal supply of 405.5 MT, which has now been revised to 428 MT, reducing the projected gap to 33 MT. The projected import of coal has been estimated at 20.5 MT, still leaving an uncovered gap of around 13 MT. The shortage is projected to increase to 95 MT in 2012. On the other hand the non-core sector consumers like textile, and paper received only 51 MT (13.4%) of the off-take in 2004/05. The brick sector that uses over 25 MT of coal annually was officially supplied with only around 4.5 MT.

To augment production, captive mining route was tried, but it failed to yield the desired result even when 87 blocks were allotted to various parties. Even after a decade, only six coal blocks could produce barely about 9.6 MT of coal in 2004/05. Commercial mining could not be allowed to private parties since the Coal Mines (Nationalization) Amendment Bill, 2000, has been pending for years. As an alternative, states were allotted coal blocks for commercial mining since the provisions of the Coal Mines (Nationalization) Act, 1973,do not apply to them and their undertakings. These ventures have not yet started yielding results and may take a few more years to do so. However, this has opened new opportunities for private sector, which can now get into joint ventures with state governments to provide expertise (which most of the states lack) and, thus, enter into commercial mining. The NTPC and the DVC (Damodar Valley Corporation) have also been finally allotted coal blocks for their own use and more blocks are now on offer to state electricity boards. The NTPC has plans to produce 50 MT of coal annually by 2009/10. Similarly, CIL (Coal India Limited), has formed an overseas wing for scouting for equity mining in other coal-producing countries like Australia, Indonesia, Mozambique, and South Africa for both coking and non-coking coal. India?s largest independent metallurgical coke producer, Gujarat NRE Coke Ltd, has become the first Indian company to acquire coking coal mines in Australia (NRE No.1 colliery) in late 2004.


As of January 2005, geological reserves of lignite in India have been estimated at around 36 000 MT, most of which occur in Tamil Nadu. Other states with lignite deposits are Gujarat, Jammu and Kashmir, Rajasthan, Kerala, and the union territory of Pondicherry. Lignite production in 2004/05 was 30.3 MT, showing a growth of 8.5% over the previous year. The dispatches were 30 MT. The NLC (Neyveli Lignite Corporation) produced 21.6 MT (71.1%), followed by 6.7 MT produced by the GMDC (Gujarat Mineral Development Corporation Ltd.) and rest by the GIPCL (Gujarat Industries Power Company Ltd). The share of lignite in total dispatched solid fossil fuel of India has been hovering around 7% over the last decade, the share of coal being 92.6%. The production in the terminal year of the Tenth Plan (2006/07) is projected at 56 MT (almost double of the current production), with the NLC contributing 27 MT, the GMDC 15.8 MT, the RSMML (Rajasthan State Mines and Minerals Ltd) 6.5 MT, and the rest coming from the Jayamkondam lignite block (3.2 MT). For the NLC, production was projected to grow by 9% per annum in the Tenth Plan to reach 27 MT during 2006/07. However, the NLC?s actual growth is now expected to be only 4.2% per annum against 4.9% in 2004/05 and production during 2006/07 will only reach 21.5 MT.

Deep-seated coal deposits

The total geological resources of Indian coal up to a depth of 1200 m (metres) in seams of 0.9 m or more in thickness, as on 1 January 2005, as reported by the GSI (Geological Survey of India) is 248 BT (billion tonnes). While only 38% of this falls under the ?proved? category, rest is put under the ?indicated? and ?inferred? resources. The proved resources within 0?300 m are reported to be 71 BT, which is 76% of the total proved resources. If the 14 BT proved resources of Jharia coalfield (0?600) are taken out of the reckoning, 90% of the resources that have been proved in recent years lie within a depth of 300 m only. Only 8% (6.5 BT) of the proved resources belong to 300?600-m depths and only 2% in the 600?1200-m depths. Thus, most of the recent exploration in emerging

coalfields seem to have been restricted to a maximum depth of 300 m only. In the ?indicated? category of resources, almost 60% belong to the 0?300-m depth range. Non-availability of enough proved reserves at depths beyond 300 m and adverse economics of coal production from deeper seams would continue to restrict deep underground mining. Understandably, both opencast and underground mines are restricted to the depth of 300 m.

Underground coal gasification

Though the GSI has reported some deep-seated reserves, ONGC (Oil and Natural Gas Corporation Ltd), while drilling for oil and gas, has discovered large deep-seated coal/lignite reserves in Gujarat and elsewhere. The ONGC is now planning pilot projects on UCG (underground coal gasification) in coal and lignite in Gujarat, Rajasthan, and Tamil Nadu on the recommendations of the Skochinsky Institute of Mining of Russia. GAIL (India) Ltd also signed a memorandum of cooperation with Ergo Exergy Technologies Inc., Canada, to explore UCG projects in coal and lignite in India. Ergo Exergy will help GAIL to determine the technical and economic viability of each project and bring in efficient drilling techniques and production of UCG gas in commercial quantity with quality. GAIL also plans to set up a coal gasification project in eastern India (Durgapur, Haldia, and Talcher) to produce 3.4 MSCMD (million standard cubic metres per day) of syngas. Moreover, in September 2005, GAIL has signed an MoU (memorandum of understanding) with the Shaanxi Huashan Chemical Industry group of China to undertake coal gasification activities in the Shaanxi province.

Case Studies
Articles and Papers