50th Foundation Day of Coal India Limited | 05 Nov 2024

Source: PIB

Why in News?

Recently, Coal India Limited (CIL) marked its 50th Foundation Day, established as the apex holding company of the nationalised coking coal (1971) and non-coking mines (1973). 

• CIL functions under the Ministry of Coal and is headquartered in Kolkata. 

What are the Key Facts About Coal India Limited? 

• About: CIL is a state-owned coal mining corporation in India, responsible for producing and managing coal resources in the country. 
  • It was founded in 1975 and is the world's largest coal producer. 
• Organisational Structure: CIL is classified as a 'Maharatna' public sector enterprise and operates through 8 subsidiaries like Eastern Coalfields Limited (ECL), Bharat Coking Coal Limited (BCCL). 
  • Mahanadi Coalfields Limited (MCL) is CIL’s largest coal-producing subsidiary. 
• Strategic Importance: Over half of India’s installed power capacity is coal-based, with CIL supplying around 78% of the country’s total coal production.  
  • Coal also accounts for 40% of India’s primary commercial energy needs. 
• Mining Capacity: Across eight Indian states, CIL operates in 84 mining areas, and manages a total of 313 active mines.  
• Recent Developments: CIL recently unveiled the Strategy Report on Coal and Lignite Exploration, along with the Mine Closure Portal. 
  • It also announced the development of a 50 MW solar power plant at the Nigahi project (Singrauli, MP) that outlines a framework for coal and lignite exploration. 

What are the Key Points Related to the Coal Sector in India? 

• Pre- Independence: Coal mining in India began in 1774 by M/s Sumner and Heatly in the Raniganj Coalfield along the river Damodar. 
  • The introduction of steam locomotives in 1853 significantly boosted demand. 
• Post-Independence: Founded in 1956, the National Coal Development Corporation (NCDC) played a vital role in the systematic and scientific development of the coal industry. 
• Nationalisation of Coal Mines: The nationalisation process occurred in two phases: 
  • Coking coal mines were nationalised first in 1971-72. 
  • Non-coking coal mines followed in 1973. 
• Current Production: India achieved coal production of 997.83 million tonnes (MT) in 2023-24. CIL's production reached 773.81 MT, with a growth of 10.04%. 
  • Small quantities of coal are also produced by TISCO, IISCO, DVC and others. 
• Coal Import: In the year 2022-23, total import of coal was 237.668 MT compared to 208.627 MT in 2021- 22, thus showcasing an increase of 13.92% over 2021-22.  
  • Coal was mainly imported from Indonesia, Australia, Russia, South Africa, US, Singapore and Mozambique. 
  • Sectors such as Steel, power, cement, and coal traders import non-coking coal to meet their supply needs. 

What is the Economic Significance of the Coal Sector? 

• Energy Backbone: Coal is the primary energy source of energy which predominantly fuels thermal power plants and fulfils over half of India’s primary energy needs. 
  • Coal demand is projected to rise to 1,462 million tonnes (MT) by 2030 and 1,755 MT by 2047, highlighting its ongoing importance for electricity generation. 
• Railway Freight: Coal is the single largest contributor to railway freight in India, accounting for nearly 49% of total freight income.  
• Revenue Generation:  The coal sector contributes over Rs. 70,000 Crore annually to central and state governments through various taxes, royalties, and GST. 
  • Funds collected from the District Mineral Fund and the National Mineral Exploration Trust supports socio-economic and infrastructure projects, especially in coal-producing regions. 
• Employment Opportunities: The coal sector is a significant source of employment, providing jobs to over 2 lakh individuals in Coal India Ltd and its subsidiaries, along with thousands of contractual workers. 
• Corporate Social Responsibility (CSR): Coal sector PSUs, particularly Coal India Ltd, invests in healthcare, education, water supply, and skill development in coal-producing regions, demonstrating the sector's commitment to community welfare.

What are Challenges in India's Coal Sector? 

• Environmental Challenges:  
  • Air Pollution: Burning of coal results in emissions of Sulphur dioxide, Nitrogen oxides, Particulate Matters among others, which results in acid rain, smog, haze, and respiratory illnesses. 
  • Poor Water Quality: High levels of dissolved solids are detected in nearby water bodies. Excessive pumping of groundwater further exacerbates water scarcity issues. 
  • Land Degradation: Open-cast mining which requires significant land acquisition, leads to deforestation and loss of biodiversity. 
• High Cost of Production: Reports indicate that the average cost of production is approximately Rs 1,500 per ton, which is relatively high compared to other coal-producing countries. 
• Coal Quality: A significant portion of the coal produced in India is of inferior quality, which impacts efficiency.  
  • According to CIL, 30-40% of domestic coal is classified as non-coking coal, which is less efficient for power generation. 
• Investment in Renewables: India aims to increase its renewable energy capacity to 500 GW by 2030. The coal sector’s dominance poses a challenge to this goal. 
  • Investments in coal competes with investment in growth of renewable technologies. 
• Monopolistic Market Structure: The nationalised structure of the coal industry, dominated by CIL, has led to concerns about monopolistic practices, including one-sided supply agreements that disadvantage consumers. 

How to Address Challenges in India's Coal Sector? 

• Mitigating Environmental Challenges: Installation of scrubbers, Flue Gas Desulfurization and Electrostatic Precipitators (ESPs) can reduce sulphur dioxide, nitrogen oxides, and particulate matter emissions. 
  • Adopt water recycling, rainwater harvesting, and measures to improve the quality of water bodies affected by mining activities. 
• Promoting Competition: Allow private players to participate in coal mining and distribution more freely to encourage competition and enhance consumer choice. 
• Investment Diversification: Create a clear roadmap for transitioning from coal to renewable energy sources, ensuring that investments in renewables do not stagnate due to coal sector dominance. E.g., Greening Initiatives 
• Cost Management Initiatives: Explore measures to reduce the cost of coal production through technological advancements, improved mining techniques, and better resource management.