India’s reliance on coal to meet its energy requirements cannot be discounted in the near term. But with the increasing importance of alternative and clean sources of energy in the overall energy mix, Coal India, which produces around 78 per cent of the country’s coal output, has worked out a comprehensive diversification strategy, which is estimated to boost the earnings of the public sector miner while maintaining its long-term relevance in the energy sector. Debasish Nanda, director, business development, Coal India outlined the plans and progress of the proposed projects of the mining behemoth both in India and overseas in an interview with Pinak Ghosh from The Telegraph.

Coal India is diversifying into coal gasification, coal to chemical, thermal power, renewable power, fertiliser production, pump storage projects etc. Could you give an overview of the projects planned, the proposed capital to be spent and the estimated timelines for each project?

Ans. For coal gasification, Bharat Coal Gasification and Chemicals Limited was recently formed as a CIL arm. It is a joint venture (JV) between CIL and BHEL with equities of 51 per cent and 49 per cent, respectively. The end product is ammonium nitrate, a major ingredient in the manufacturing of bulk explosives which CIL uses in large quantities in its opencast mining operations. The plant will come up in Lakhanpur area of Mahanadi Coalfields Limited in Odisha and produce 6.60 lakh tons of ammonium nitrate annually. The coal requirement of around 1.3mt will be met from MCL. This project is envisaged to come online by 2028-29.

Another JV with GAIL is for setting up a coal-to-SNG (synthetic natural gas) project at Sonepur Bazari Area of Eastern Coalfields Limited in the Burdwan district of Bengal, which is at an advanced stage. A detailed feasibility report is in progress. The combined estimated cost of these projects is around ₹25,000 crore.

As part of coal to chemicals, CIL has joined hands with four other PSUs — IOCL, NTPC, FCIL, and HFCL — to form Hindustan Urvarak & Rasayan Limited (HURL) for the revival of three natural gas-based ammonia-urea fertiliser plants at Gorakhpur (UP), Sindri (Jharkhand) and Barauni (Bihar).

CIL, NTPC Limited and IOCL are the lead promoters of HURL holding a total of 89 per cent equity among them on equal partnership of 27.67 per cent each. The objective is to supply and complement the urea requirement of the farmers in the eastern and northern parts of the country. These projects were installed at a combined estimated cost of around ₹30,000 crores. During FY24, HURL recorded a revenue of around ₹15,000 crore and generated a net profit of around ₹1,325 crore.

Talcher Fertilizers Limited (TFL) is another coal-based fertilizer plant at Talcher (Odisha), a JV between CIL, GAIL, RCF and FCIL. Currently, the project is in the construction stage and is progressing. The estimated capital cost is around ₹17,000 crore.

CIL is also looking to set up thermal power plants. Mahanadi Basin Power Limited, a wholly owned subsidiary of MCL, is setting up a capacity of 4,000mw. In the first phase, a 2 X 800mw capacity plant will be set up through a special purpose vehicle in Sundargarh, Odisha to be followed up by 3 more units of 800mw in the second phase. CIL has also signed an MOU with two state discoms — APDCL (Assam) and HPPC (Haryana) for power purchase.

With an eye on becoming a net-zero energy company, CIL is setting up 3,000mw solar power capacity by 2027-28 within and outside its command areas. Beyond that, we are further targeting another 2000mw. In collaboration with RRVUNL, and other state PSEs, we are further exploring mega projects in our renewable energy pursuit.

CIL is aggressively exploring critical mineral assets such as lithium, graphite, cobalt, and nickel domestically where available and also overseas in destinations such as Australia, Chile, and Argentina. Concurrently, CIL is also participating in the auction of critical mineral blocks which are being carried out by the ministry of mines. CIL is in talks with companies to collaborate on battery manufacturing as a way forward toward advanced chemistry cells and energy storage devices manufacturing value chain.

CIL has also identified 24 abandoned mines or sites for pre-feasibility pump storage projects (PSP). A consultant has been appointed to examine these assets which can be gainfully converted into PSPs. A pre-feasibility report is expected to be submitted by November, after which a detailed feasibility report will be prepared to proceed further. Going forward, the best five sites will be initially taken up, for PSP projects.

How will diversification help Coal India’s business prospects in the future?

In India, where around 73 per cent of electricity generation is coal-dependent, CIL produces around 78 per cent of the country’s entire coal output and is a vanguard of the country’s energy sector. These efforts are for future preparedness to stay relevant and ahead in the energy sector. Since most of these projects have longer gestation periods the foundation has to be laid now to reap results in future. The larger vision of the company prioritises diversification into new business verticals over the coming decade to adapt to changing dynamics in the energy market.

Through a mix of multiple diversification initiatives, we are eyeing a topline boost of around 18 per cent to 20 per cent by 2030. In the longer term, CIL expects to expand beyond the current geographical boundaries in the minerals sector.