History of Coal Industry

Coal mining in India dates back to the 18th century, however the regulatory framework for this industry was conceived in 1923. In 1972-73, the Indian government nationalised the coal industry, primarily to develop the sector, since it was considered of strategic importance for rapid industrial development. Coal India Ltd (CIL) was incorporated as a holding company for seven coal producing subsidiaries and a pllanning and design focussed institute. It is engaged in mining from a total of 495 working coal mines which account for nearly 88 percent of total production. Coal Industry highlights: India is the third largest producer of coal in the world. Coal is one of the primary sources of energy, accounting for about 67% of the total energy consumption in the country. India has the fourth largest reserves of coal in the world (approx. 197 billion tonnes.). Coal deposits in India occur mostly in thick seams and at shallow depths. Noncoking coal reserves aggregate 172.1 billion tonnes (85 per cent) while coking coal reserves are 29.8 billion tonnes (the remaining 15 per cent). Indian coal has high ash content (15-45%) and low calorific value. With the present rate of around 0.8 million tons average daily coal extraction in the country, the reserves are likely to last over a 100 years. The energy derived from coal in India is about twice that of energy derived from oil, as against the world, where energy derived from coal is about 30% lower than energy derived from oil. As of 2003, India has 19 coal washeries (total capacity:27.2 million tonnes per annum) of which 15 are owned by CIL. The use of beneficiated coal has gained acceptance in steel plants and power plants located at a distance from the pithead. Energy and Environment 27 November 2006, Forbes magazine China 126,214.7 million short tons 2,156.4 million short tons 2,062.4 million short tons India 101,903.2 million short tons 403.1 million short tons 430.6 million short tons

Recoverable Coal Reserves Coal Production Coal Consumption

Production
India has huge untapped potential for underground mining with extractable reserves upto a depth of 600 metres. Currently mining is done predominantly by open cast methods to exploit the 64 billion tonnes of proven reserves situated within a depth of 300 metres. Lower operating and production costs, greater percentage recovery and a higher output per manshift compared with underground mining are some of the advantages presently associated with open cast mining in India. External trade Presently, India is not a major exporter of coal and essentially caters to the demands of neighbouring countries like Bangladesh, Nepal and Bhutan. However, there are no restrictions on coal exports under the existing Export-Import Policy of India. India imports small quantities of low ash-conten coal principally for use by steel plants, which blend it with Indian coal. Import duties are low and are expected to be lowered further.

EXPORT OF COAL
Coal is under Open General Licence (OGL) list. India exports coal to the neighbouring countries to meet their demand of coal. The traditional buyers of Indian coal are Nepal, Bangladesh and Bhutan. Export to Nepal and Bhutan is done in rupee exchange as per the protocol between the two countries and with Bangladesh it is done in US Dollar. Export of coal to the neighbouring countries was earlier canalised through the Mineral and Metal trading Corporation, but for the last few years it has been decanalised. Export of coal by CIL is made through tender route The quantum of coal exported by CIL during 2002-03 to the neighbouring countries was 12,650 tonnes. During 2003-2004 the quantity of coal exported by CIL was 35,831 tonnes (Provisional).

IMPORT OF COAL
As per the present Import policy, coal can be freely imported (under Open General Licence) by the consumers themselves considering their needs and exercising their own commercial judgments. Coking coal is being imported by Steel Authority of India Limited (SAIL) and other Steel sector manufacturing mainly to bridge the gap between the requirement and indigenous availability and to improve the quality of overall blend for technological reasons. Coal based power plants, cement plants, captive power plants, sponge iron plants, industrial consumers and coal traders are importing non-coking coal on consideration of transport logistic and commercial prudence as well as against export entitlements. Coke is imported mainly by Pig-Iron manufacturers and Iron & Steel sector consumers using mini-blast furnace. Details of import of coal and products during the last five years(as reported by Coal Controllers

Organization) as under: (in million tonnes) Coal 1999-00 2000-01 2001-02 2002-03 2003-04*

Coking Coal Non-coking Coal Coke Total Import * Provisional and estimated.

10.99 8.71 2.41 22.11

11.06 9.87 2.42 23.35

11.11 9.44 2.28 22.83

12.95 10.31 2.25 25.51

12.00 9.50 2.00 23.50

The current duty( during 2003-04) on imported coal as amended on 28.2.2004 is as under:-

Type of coal Coking Having upto 12% ash Coal Having ash 12% and more Coke Non-Coking Coal

Import Duty 0% 15% 5% 5%

A look into the future

India's coal demand is expected to increase manifold within the next 5 to 10 years due to the completion of on-going coa;-based power projects, and demand from metallurgical and other industries. Demand for coal has been rising at an annual rate of 6 per cent since 1992-93 and CIL and its subsidiaries will be unable to meet the projected demand alone. The investment needed to bridge the gap----400 million tonnes, between the level of production in the public sector (290 million tonnes in 1995-96) and the projected demand of 690 million tonnes (2009-10)----is estimated to be US$ 18 billion. The public sector corporations----are expected to increase their production by about 250 million tonnes by 2009-10, subject to their making an additional investment of US$ 8-10 billion. The balance requirement of 150 million tonnes will have to be met by imports in the short run and by new investments in the long run. With the advent of the economic reforms, government controls regarding pricing and distribution have been relaxed and a new coal policy permitting private sector participation in commercial coal mining, has been announced.