Companies & Industry »Company News»Company News Details
Company News Details

BSE   18 Jun 18 | 12:00 AM

274.60 -4.45 (-1.59%)
Mkt Price (Rs)   Chg Rs (Chg %)
Code: 533278
Face Value: N.A.

NSE   18 Jun 18 | 12:00 AM

274.20 -4.85 (-1.74%)
Mkt Price (Rs)   Chg Rs (Chg %)
1 Week : Rs 283.50 (-3.14%)
1 Month : Rs 266.40 (3.08%)
1 Year : Rs 253.90 (8.15%)
change companytradenow

CIL shifts focus away from underground mining

Avishek Rakshit / Kolkata 02 Dec 16 | 07:46 AM

Coal India (CIL), the world's largest coal miner, seems to have lost its emphasis on underground mines whose production as well as mine productivity has declined over the past decade. Instead, CIL's production results indicate a focus on upping the mine productivity and increasing the production contribution of opencast mines to the consolidated output from 86.66% in 2005-06 to 93.73% in 2015-16. 

CIL, through its subsidiary Western Coalfields, is eyeing to open one mine every month with a total production capacity of around 30 million tonnes (mt) per annum, to keep up with the production target as the existing mines start running out of coal. However, the planned mines are opencast in nature.

Widgets Magazine

In total, the company has envisioned taking up 129 new coal mining projects during the XII Five Year Plan. Under the planned scheme of things, the new mines are expected to contribute 87 mt of black diamond in 2016-17, which will reach 182 mt in 2019-20.  Initial as well as circulating capital requirements for opencast mines are much lower than underground ones. 

The state-owned coal monolith has 413 mines in operation, of which 207 mines are underground, 176 are opencast and 30 are mixed in nature. Interestingly, although opencast mines comprise 42.6% of the mines portfolio, these contribute as much as 93.7% of the total production. 

Despite the miner pushing in more use of technology over the decade and investing more than Rs 3,000 crore (estimated) on mechanisation of mines, the contribution of the underground mines to the total production has declined. Compared to the production contribution of 13.34% to the total output of 343.39 mt in 2005-2006, the same from underground mines declined to contribute only 6.27% to the total output of 538.79 mt in 2015-16. This trend also indicates a sharp decline of 26% in underground mining over the 2005-06 to 2015-16 time period. 

In the last financial year, the Centre had provisioned an allocation of Rs 762 crore or 13% of the total planned capex of the year for betterment of underground mines. 

The biggest impediment, according to former Coal India chairman Partha Bhattacharya, is the lack of indigenous heavy mining equipment manufacturers. This limits the scope of mechanised mining in underground minefields. 

"Importing the equipment is an option, but it is too costly. However, if the mine productivity rates need improvement, mechanisation is the only option," said Bhattacharya, who believes that down the line, Coal India will have to ultimately shift over to underground mining. 

Changing Strategy

In 2007, Coal India, together with Bharat Earth Movers and Damodar Valley Corporation, had made the move to acquire shares of Mining and Allied Machinery Corporation (MAMC) to ensure it is able to procure mining equipment made domestically. However, the MAMC project so far failed to generate any results making the miner dependent on imported technologies. 

A Coal India official, however, said there were efforts to procure latest technologies but underground coal mines don't have large areas of contiguous underground coal deposits, making it difficult to deploy longwall mining technology. 

These methods were first introduced in the 1980s but so far it has failed to deliver the desired results as the productivity remains low compared to the opencast mines. In 2005-2006, the output per manshift (OMS), a measure of mine productivity, stood at 0.71 mt for the underground mines, which slightly improved to 0.80 mt in 2015-16. The OMS for opencast mines nearly doubled from 7.51 mt in 2005-06 to 14.35 mt in 2015-16. 

"This is also because we've legacy underground mines whose productivity is quite low," said the Coal India official. 

According to Bhattacharya, 25% of a mine's reserves are found at depths beyond 300 metres and in case Coal India wants to extract the entire coal from a mine, it will have no other choice but to deploy underground mining technology. 

Widgets Magazine


Company Price Gain (%)
ICICI Bank292.503.61
Tata Motors308.751.83
Dr Reddy's Labs2,380.251.24
Bajaj Auto2,901.900.98
Maruti Suzuki8,993.400.46

Online Portfolio

You can create Online Portfolio here using the below button.

Widgets Magazine