Coal India's Plans for 20 Mines Hit by Land, Environment Delays

Twenty new coal mine projects by state-run Coal India, planned with annual capacity of 52 million tonnes, have been delayed by difficulties acquiring land and environmental clearances, the coal minister said on Thursday, underlining the uphill task he faces in reforming the sector.

The new government of Prime Minister Narendra Modi is hastening environmental clearances - which slowed to a trickle under the previous administration - to help fire up power plants and fulfill Modi's campaign promise to light up every home.

But land acquisition remains a major problem, as it is largely controlled by India's states, many of which are ruled by parties other than Modi's Bharatiya Janata Party.

Coal and Power Minister Piyush Goyal told parliament the projects, costing more than 200 million rupees ($3 million), "could not be started due to constraints of land acquisition and environmental clearance".

This month, a Coal India unit, Mahanadi Coalfields, had to halt operations at three mines in Odisha following protests over company plans to relocate nearby residents to make way for expansion. Politicians often side with displaced people.

Goyal told lawmakers six of the delayed mines, with estimated annual output of 27 million tonnes, could start this fiscal year, which ends on March 31. Most of the rest are likely to commence operation next year.

That should help boost the output of Coal India, which accounts for more than 80 per cent of the fuel India digs out. The government has set the firm a target of 507 million tonnes for the current fiscal year, although it has failed to hit its target for years.

Coal India and closest rival Singareni Collieries, which together account for more than 90 per cent of India's coal production, plan to produce a total of 561.5 million tonnes this fiscal year.

But demand is expected to rise 6 per cent to 787 million tonnes, which will mean shipments by the world's third-largest coal importer could hit 200 million.

Copyright: Thomson Reuters 2014