COAL SECTOR

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Coal

• Coal is a combustible black sedimentary rock, formed as rock strata called coal seams.
• Coal is mostly carbon with variable amounts of other elements; chiefly hydrogen, sulfur, oxygen, and nitrogen.
• Coal supplies about a quarter of the world's primary energy and two-fifths of its electricity.

 

Coal in India

• Coal in India was first mined in 1774 by East India Company in Raniganj Coalfield along the Western bank of Damodar River.
• Today, India has the fifth largest coal reserves in the world.
• India is the second largest producer of coal in the world, after China.

Distribution & Key Statistics

* Coking coal, is a grade of coal that can be used to produce good-quality coke. Coke is one of the key irreplaceable inputs for the production of steel. There are many varieties of coal in the world, ranging from brown coal or lignite to anthracite. Coke is produced by heating coking coals in a coke oven in a reducing atmosphere.

*Petroleum coke is a byproduct of the oil refining process.

 

Why does India import coal when it has enough?

• India does not have enough reserves of good quality coal especially coking coal that is used as a raw material in steel making and allied industries.
• Most of it is imported from Indonesia, South Africa, Russia and Australia.
• Thus, the imports are mainly to compensate the lack of good quality coal, especially coking coal.
• Plus, there is a gap between demand and domestic production capacity.
• In FY19, the country produced around 730 mt of coal, while the consumption was close to 965-970 mt.

Way ahead

• For Coking coal India would have to depend upon imports only.
• However, rest of the imports can be substituted by ramping up coal production.
• For these, bottlenecks in domestic coal production need to be removed. Eg- issues in acquiring land and strict rules and regulations; mismatch of demand and supply of railway wagons for transportation & coal off take; issues in clearances etc.
• The government has been progressively liberalizing the coal sector in recent times.

 

Examples

• National Mineral Policy (NMP) approved in 2019, to ensure transparency in the allotment of mining blocks.
• 100% FDI under the automatic approval route allowed for the sale of coal and coal mining activities.
• Amendment of Mines and Minerals (Development and Regulation) Act (MMDRA) 1957, for seamless transfer of clearances.
• Removal of end user restrictions. Permitting commercial coal mining for local and global firms. Now, private players can participate in the auctions.

Note: The Coal Industry in India was nationalized during 1972-73.