Possibilities and Challenges in Indian Coal Mining Sector

Introduction

India’s desire to be a developed country requires growth in its GDP at an accelerated rate that requires massive investment in infrastructure and power sectors. Manufacturing and construction sectors also require a boost to build up the economy. Accordingly, there has been a significant progress in the past few decades in the Indian Mining Sector, particularly in the mines producing major minerals like coal, iron ore, bauxite, manganese and others. Coal being a major input for the production of both power and steel acquires significant importance in boosting country’s economy.

The scale of operation in coal mining has increased manyfold over the years. Individual mine capacity has increased to as high as 50 million tonnes per year. This has been possible by increasing the thrust in production from opencast mines. The opencast coal production has increased from the level of 16.4 million tonnes per annum at the time of coal mines nationalization in early seventies to 690.4 million tonnes in 2019-20.

Opencast & Underground Coal Production in the Past One Decade

If we analyse the domestic coal production of the past one decade, we find that the share of opencast production has been increasing and that from underground has been reducing, while there has been an overall growth in the total national coal production. All India raw coal production has increased from 539.95 MT (comprising 487.99 MT from OC and 51.96 MT from UG) in 2011-12 to 716.04 MT (comprising 684.86 MT from OC and 31.22 MT from UG) in 2020-21. In percentage terms while the total production has grown at a CAGR of 3.19%, that of OC production has grown at a CAGR of   3.84% and UG production has declined at a CAGR of 5.50%.  In percentage terms the share of OC production has increased from 90.38% to 95.64% and that of UG production has decreased from 9.62% to 4.36% during the period 2011-12 to 2020-21. The trend of domestic coal production in the past 10 years is shown in Table-1.

 Table-1

Trend of domestic coal production in the past 10 years

(Production in MT)

Source: Coal Statistics 2020-21, Published by Coal Controller of India.

Type-wise percentage production is shown in Figure-1.

Figure-1

                             Source: Coal Statistics 2020-21, Published by Coal Controller of India.

Coal Consumption in India

Total coal consumption in India has been increasing over the years. The domestic coal production and supply, not being enough to meet the country’s demand, the quantum of coal imported from other countries is also rising year after year. Total coal consumption in the year 2011-12 was 640.51 MT with a imported component of 105.21 MT. These figures have increased to 908.35 MT and 217.46 MT respectively in the year 2020-21. Year-wise coal consumption showing domestic supplies, imported coal and total consumption is shown in Figure-2.

 

Figure-2

Source: Data taken from Coal Statistics 2020-21

Domestic Coal Producers

Domestic coal production largely comes from Coal India Limited (CIL), followed by Singareni Collieries Company Limited (SCCL) and a number of other smaller public sector and private sector captive coal miners. In the year 2020-21, out of the total domestic production of 716.08 MT, public sector companies contributed 685.95 MT and private sector’s production was 30.13 MT. Table-2 shows the company-wise production from both OC and UG mines for the past two years.

 

                             Source: Coal Statistics 2020-21, Published by Coal Controller of India.

Future Coal Demand and Availability Scenario

The Coal Vision 2030 document of Ministry of Coal, published in 2019, envisaged overall coal demand for the country to be 900 – 1000 MT by 2020 and projected it to grow to 1300 – 1900 MT by 2030, depending on different scenarios of development in the country. While the projected demand for 2020 has more or less come true, the futuristic coal demand has wide range, as the nature of uncertainties in the ecosystem are also quite wide. By 2030, thermal coal demand is estimated to be 1150 – 1750 MT.

CIL has proposed to produce and supply 1000 MTPA by the year 2024. With the base of 602 MT at 2019-20, this will require a CAGR of more than 10%. Sustaining this type of growth consistently over next 4 years is a daunting task for CIL, particularly in view of a negative growth in the year 2020-21. It is also evident from Figure-2 that there has been a declining trend in the total coal consumption of the country over the past three years. One of the reasons for this decline is sited as the Covid Pandemic, which started in March 2020. However, the decline had started in the FY 2019-20 itself, even before the Pandemic influenced the coal consumption. The current FY 2021-22 shows increased domestic coal consumption with drastic decline in the import of coal. The overall coal consumption is likely to remain the same as that of last year or may slightly increase. This shows that growth in total coal consumption is unlikely to reach the level as projected in the Coal Vision 2030 Document. However, increased thrust of reducing the import of coal and meeting the demand largely through domestic coal production, puts onus on domestic coal producers to increase the production capacities.

Coal Import Concern

Coal import had started in the year 1985 itself for meeting the coking coal requirement. The quantity kept on growing thereafter but remained under 25 MT till 2001. Coal imports, excluding lignite, increased to 59 MT in 2008-09 and thereafter steeply rose up registering nearly 251 MT in 2019-20. This figure comprises nearly 54 MT of coking coal, coke and other products and about 197 MT of non-coking coal. Import of coal involves huge foreign exchange outgo. The Government is seriously concerned about this and therefore the thrust has been increased on reducing import of coal and meeting such requirements by increasing domestic coal production to the extent possible. Due to rising prices of the imported coal, the import component has reduced in the current fiscal to a great extent and the domestic coal consumption has increased. While it may not be possible to reduce import of coking coal due to its non-availability domestically, quantum of thermal coal import can definitely be reduced, particularly for the hinterland thermal power plants. Thus, the pressure is increasing on domestic coal producers to meet the country’s demand.

Planned Mine Capacities by Coal Producers

Quick ramp up of production is possible only by opening more high-capacity OC mines. Though, the coal sector is now open for commercial mining, the interest shown by the investors in the last two auctions has not been very enthusiastic. Established players in coal mining, therefore, like CIL and SCCL, will have to play a major role in augmenting coal production for meeting the country’s demand of coal.

Today the total number of mines with CIL is stated to be around 360. The size of mines has been on the increase over the years both in terms of area and the mine capacity. As on date CIL has 20 mines with annual capacity of more than 10 MTPA, contributing 380 MTPA, which is more than 50% of CIL’s current total production. It is also learnt that CIL has plans to increase the number of high-capacity mines to 35 with total capacity of 806 MTPA, ranging from 10 MTPA to 70 MTPA in the near future. SCCL also must have planned for augmenting coal production to the extent feasible.

Challenges in Meeting the Demand

As we have seen from the past production trend, contribution from underground mining has been shrinking and that from OC mining increasing year after year. There are several reasons for shrinkage of underground production and the scope of its increase at an accelerated rate is remote. The increase therefore has to come from expansion of existing OC mines and opening up more high-capacity OC mines. However, be it opencast or underground mines, the challenges in opening a mine these days are numerous that we can discuss in the following paragraphs.

Challenges in opening a Coal Mine

For opening any new coal mine or for expansion of existing mines, the most common challenges are faced by the project proponents in the form of:

• Social resistance to mining
• Getting different statutory clearances
• Delays due to political conflict between the Central and State Governments
•  Availability of land
• Rehabilitation and resettlement of project affected people

Coal, though responsible for providing 55% of primary energy to the nation, is considered as a dirty fuel due to its inherent colour as well as its carbon emission contribution to the atmosphere. Coal mining, particularly opencast mining, is seen by the general mass as displacer of human settlements, polluter of environment – air, water & noise and causing distress to the local people due to loss of their traditional livelihood. As such, as the time is passing, the social resistance to coal mining is increasing manyfold. The resistance comes particularly from the project affected people and the environmentalists., though everybody wants electric power for better living. There have been instances of not allowing even exploration for coal in some parts of the country, leave aside opening a mine. Such misgivings of coal mining need to be allayed by the coal producers by demonstrating the real benefits of coal mining in that area and taking utmost care of the project affected people and maintaining the environmental standards during mining.

Coal production is greatly dependent on how fast the statutory clearances are given by the government for functionalization of a coal block. The process of getting clearances and the number of clearances required for starting a project is very large and cumbersome. Almost in all the approvals, both the Central and the State governments are involved, and it takes a lot of time before any clearance is reached. The time for bringing a coal project to production varies from five years for an open cast mine to about seven years for an underground mine. However, in practice, it is much more and depends on how much co-operative the two government agencies are. Though, the central government has declared to set up a single window clearance system for coal blocks, it only provides for Mining Plan approval so far in this system, which involves only central govt. Major obstacles are in forest land clearance, environmental clearance and a number of other clearances where positive support of both Central and State governments and other agencies is required. In the last five years, the captive miners who got the coal blocks allocated under the CMSP (Coal Mines Special Provisions) Act, have just been able to reach a production level around 55 million tonnes. These are the mines which were actually producing before cancellation of the blocks and got stopped because of cancellation.

Coal mining disturbs land use in the mining area. Land needs to be acquired for mining and it is considered equivalent to raw material for any other industry. No mining is feasible without having land right in an opencast mine. For an underground mine also having surface rights is a pre-requisite for uninterrupted mining with caving of overlying strata of coal seams. The Land Acquisition and Rehabilitation & Resettlement Act of 2013 has made the process of land acquisition properly defined but made it more complex. Acceptance of starting a mine in the area by the local population has been made mandatory through this Act, apart from the steep compensation for land and R&R benefits. This has been causing not only huge delays in the process of land acquisition but also making the project unviable in many cases due to huge capital outgo in land. Land and Rehabilitation put together constitute a major part of the total capital investment of a coal mining project these days. This, coupled with high stripping ratio in an opencast mine, which is generally the case with increasing depth and poorer quality of coal seams make the project unviable in the current pricing scenario.

Challenges specific to OC Mines

Challenges specific to OC mining can be broadly classified in three categories:

·       Environmental challenges
·       Technological challenges in maintaining pit slope and dump stability
·       Availability of large size equipment for mass production

Environment, particularly air, water and noise, is the greatest casualty of opencast mining operation. Mining pollutes air and water due to generation of dust at different centres of mining and transportation activities. Suppression of dust at the points of generation is a major activity that often goes unattended leading the dust to get airborne. Dust generation is more prominent during blasting and loading of blasted rocks/coals in the transport equipment. Loading equipment do not make any provision for water spraying during loading operation. I had seen such an arrangement made by the colliery engineer on a large excavator cum loading machine (30m³ bucket capacity) in the UK and wanted the suppliers of loading machines in India to incorporate similar facility. But the manufacturers/suppliers had several excuses to not go for it. If, dust suppression arrangement at the point of loading is made automatic, I think, dust getting airborne in opencast mines, to a great extent, will be reduced. We need to innovate to minimize the environmental degradation due to opencast mining. Minimising noise generation at the machines is another area of concern. The loading and transport equipment should have provisions of double silencers to keep the noise level to within permissible level. Using mine water for agricultural purposes after its treatment and recycling for dust suppression is another area that needs to be adopted in every mine as a process of mining.

With increasing depths of opencast mines, pit and dump slope failures are becoming more prominent now. There have been several instances of internal and external dump failures in some of the large mines of CIL, causing loss of life and equipment. Pit slope failure or bench failure is also prominent in some steep mines. These need to be technically handled with proper pit and dump design to obviate such problems.

Mass production requires large size equipment that can handle larger volumes by individual equipment, leading to increased productivity, reduced cost and reduced environmental impact. Internationally, excavators up to 75m³ bucket size and dump trucks of 400 tonne capacity are being manufactured. In India we have not been able to produce loading machines of more than 10m³ capacity and dump trucks of 100 tonne capacity. Any equipment of size larger than these are to be imported that takes lot of time due to limited number of manufacturers participating in the tenders. International manufacturers of equipment having bases in India for manufacturing lower size equipment and the domestic manufacturers should be mandated to manufacture large size equipment, as tendered for, in India to create manufacturing capacity for larger equipment as well as availability of spares.  

Challenges specific to UG Mining

Challenges specific to underground mining are numerous and can be broadly categorized under the following heads:

·       Geological complexity of the coal resource.
·       Access to the resources by sinking shafts.
·       Non-availability of mass production equipment indigenously.
·       Much higher cost of production.
·       Surface subsidence
·       Drastically reduced extractable reserve.

Indian coalfields are formed on Drift theory of coal deposition and have experienced extensive faulting and igneous intrusions over the geological ages. These have made the coal deposits geologically very complex with large number of faults, dykes, sills, thinning and thickening of coal seams and deposition of thick dirt bands within the coal seams. All these disturbances individually alone have the capacity to pose serious problems in underground mining of coal seams. The problem becomes more complex where more of such disturbances exist together. Geological complexity limits selection of mining technology. For any mass production technology, such disturbances are not desirable. Thus, most of the Indian coalfields are not amenable for extensive mechanization and hence, limit the choice of planning large capacity underground mines.

The choice of establishing entries to deeper deposits lies between vertical shafts and inclined drifts. With greater depths, the choice gets limited to vertical shafts, as the length of inclined drifts become very large and cost prohibitive. As over the years, new underground mines have not been established the expertise of sinking of shafts in the country has depleted. Opening of a new underground mine, therefore, requires overseas expertise in the area of shaft sinking, which is both costlier and time consuming.

For Mass Production equipment like Continuous Miner and Powered Support Longwall the mine owners have to depend on import. While the scope of Longwall mining is limited and production of such equipment may not be feasible domestically, there exists large scope of introduction of Continuous Miner in new underground mines and the equipment for this technology like Continuous Miner, Shuttle Cars, mobile Roof Bolters etc. and also other equipment like drifting machines for drivage in stone, Multi Utility Vehicles for transportation of material and debris etc. need to be manufactured indigenously for their easy and increased availability. Winders and other Hoists are also not available domestically. Indigenisation of manufacture of underground mining equipment will go a long way in increasing share of underground production from deeper deposits.

All the factors mentioned above lead to increased cost of production from underground mines. When the choice exists between OC and UG mining of any deposits, OC mining invariably wins the race on cost considerations. Most of the presently operating underground mines of CIL and SCCL run in huge  losses.

Underground mining causes subsidence of surface, depending on the depth of mining and the thickness of the seams extracted. This requires the mine owners to acquire the surface rights, else the permission for depillaring or final extraction of coal seams is not granted by the statutory authority (DGMS). Hence, even for underground mining, acquisition of surface land, either on limited lease basis or as permanent acquisition becomes necessary, otherwise the land owners do not allow mining underneath. This is true with forest land also.

Total reserve that can be extracted in any underground mine depends on its geological complexity. However, even with best of the geology in Indian coalfields, the ratio of extractable reserve to the total geological resource in the area is far less compared to OC mining. The percentage extraction in underground mines does not exceed 30-35% of the geological resource in best mines. This figure goes down hugely with increased complexity of geology. The geological resource is estimated with seam thickness of 0.5m and above, while for underground mining the minimum workable thickness of coal seams is taken to be 1.5m. Hence, a lot of resource in thin seam situations get lost in underground mines.

Conclusion

Coal mining in India has been gaining pace due to increased demand by the user industries. However, coal usage in the country has reached a plateau in the past four years with total consumption remaining within 900MT to 970MT, sometimes even declining. The future demand estimates are projected at 1300MT to 1900MT by 2030, depending upon different growth scenarios, with present indigenous annual production at around 730 MT. This will require massive thrust on increasing production from quick yielding high-capacity OC mines. The challenges in opening mines and sustaining mine production are numerous that have been discussed in the above paragraphs. All the stake holders, including the Central government and the concerned State governments will need to work pro-actively to realize the goal.

Why should > 34% ash non-coking coal not be transported and used in distant power plants?

Recently, Ministry of Environment, Forest and Climate Change has amended the Environmental (Protection) Rules, with the provision of doing away with the restriction of supply and use of >34% ash non-coking coal at the Power plants located >500 km away from the mines. This issue is a cause of concern not only for the non-government environmentalists but also for Coal India Limited which has already set up non-coking coal washeries as per the earlier mandate of the Environment (Protection) Rules, 1986.  Having been the coal industry for more than 40 years and an advocate of introducing washing of high ash non-coking coal, I thought to bring to the notice of the readers of this piece the events that have led to the current situation.

Background of first restrictions on use of >34% ash coal

With the introduction of Environment (Protection) Act, 1986 and the Rules framed thereunder subsequently, the need for taking measure to control pollution of air, water and land gathered importance for sustainable development. Several notifications were issued as per requirement from time to time and one such relating to usage of high ash non-coking coal in the power plants or other industries was framed as sub-rule 8 of Rule 3 of the Environmental (Protection) Rules in September 1997. In the background of this Rule was the results of the studies conducted with usage of washed non-coking coal in some of the power plants, namely Dahanu of BSES and also one of NTPC. The results had indicated that there was ample improvement in the efficiency of the boilers and other parameters of power generation amounting to increased production of power. As per my memory these tests had been done at three different power plants at different time frames. These tests indicated definite improvement in the plant efficiency, efficiency of auxiliary services and production of power, reducing its cost of production with the usage of washed thermal coal. Apart from this study, there was an issue of increased cost of transportation of the inert material (ash) in the case of unwashed coal being transported to far away plants leading to increased cost of power production. Thus, both from the point of view of economics and the environmental improvement, the notification was issued by the then Ministry of Environment and Forest in 1997, restricting the use of >34% ash non-coking coal in plants located >1000km away from the pit head or located in an urban area or an ecologically sensitive area or a critically polluted industrial area, irrespective of its distance from the pit-head, calculated on average annual basis. This Rule fixed the responsibility on the user of coal and not on the producer or supplier of coal.

Impact on the coal sector subsequent to notification of 1997

Subsequent to promulgation of this Rule, a lot of development in the field of setting up of non-coking coal washeries took place in the country. A large number of private investors set up such washeries to beneficiate non-coking coal linked to the consumers. Coal India’s subsidiaries BCCL and CCL, primarily washing coking coal also converted some of their washeries to wash non-coking coal and continued supplying the middling of coking coal washeries to power plants to help power plants to achieve their goal of <34% ash on annualized basis.

Coal India also adopted the strategy of setting up non-coking coal washeries and a plan was prepared to set up 20 coal washeries, including a few for washing coking coal in 2007 and actions started on some of them. The pace of setting up such washeries at Coal India subsidiaries remained very poor due to various factors including some road blocks at the Ministry of Environment and Forest.

Environmental Impact Assessment Guidance Manual for Coal Washeries

Ministry of Environment and Forest came up with an “Environmental Impact Assessment Guidance Manual for Coal Washeries” in May 2010 to speed up faster environmental clearance of Coal Washery projects.

Increasing concern of the Government for arresting Environmental Pollution

In 2010 Ministry of Environment and Forest came up with the concept of “Comprehensive Environmental Pollution Index (CEPI)” and declared several coalfields and coal consuming centers in the country, particularly those where power plants were functioning as critically polluted zones and prohibited any further developmental activities in such zones until some identified corrective measures were taken and compliance made. These developments indicated that the country was serious on implementing measures to minimize the environmental damage.

Restrictions on use of >34% ash coal made more stringent

Both the economic and environmental advantages of usage of lower ash coal had tempted the Ministry of Environment, Forest and Climate Change to modify its earlier sub rule-(8) of rule (3) of the Environmental (Protection) Rules, 1986 to restrict usage of >34% ash coal for power plants located >500 km away from the pitheads. The sub-rule (8) of rule (3) was substituted through a Gazette notification on January 2, 2014 with the following provisions:

"(8) With effect from the date specified hereunder, the following coal based thermal power plants shall be supplied with, and shall use, raw or blended or beneficiated coal with ash content not exceeding thirty-four per cent, on quarterly average basis, namely:

1. a stand-alone thermal power plant (of any capacity), or a captive thermal power plant of installed capacity of 100 MW or above, located beyond 1000 km from the pit-head or, in an urban area or an ecologically sensitive area or a critically polluted industrial area, irrespective of its distance from the pit-head, except a pit-head power plant, with immediate effect;
2.  a stand-alone thermal power plant (of any capacity), or a captive thermal power plant of installed capacity of 100 MW or above, located between 750 - 1000 km from the pit-head, with effect from the 1" day of January, 2015;
3. a stand-alone thermal power plant (of any capacity), or a captive thermal power plant of installed capacity of 100 MW or above, located between 500-749 km from the pit-head, with effect from the 5 th day of June, 2016:

Provided that in respect of a thermal power plant using Circulating Fluidized Bed Combustion or Atmosphere Fluidized Bed Combustion or Pressurized Fluidized Bed Combustion or Integrated Gasification Combined Cycle technologies or any other clean technologies as may be notified by the Central Government in the Official Gazette, the provisions of clauses (a), (b) and (c) shall not be applicable……”

In the above notification, both suppliers and users of coal are bound by these provisions. Though, it is not clear as to how this limit of 34% ash coal or the minimum distance of 500 km was arrived at, presumably these limits were kept primarily with the idea of reducing environmental pollution.

Legislative changes in coal sector subsequent to 2014 notification

Coal sector underwent a lot of developments subsequent to the notification of 2014. Captive coal blocks allotted earlier were cancelled by the Supreme Court, Coal Mines (Special Provisions) Act, 2015 came into being in October 2015 paving the way for mining by both public and private companies, the concept of commercial mining of coal blocks to be allotted through auction has been introduced and now the Government also considers commercial mining as one of the tools for Atmanirvar Bharat strategy. Recent announcement by the Finance Minister that the Government of India resolves to allocate 50 coal blocks for commercial mining is only a reiteration of its resolve to introduce private mining in coal as provided for in the Coal Mines (Special Provisions) Act, 2015. This is definitely a good initiative of the Government for increasing the domestic availability of non-coking coal and may reduce its import in the country to some extent. Further , the EPR, 1986 has now been modified with complete substitution of sub rule (8) of rule (3), freeing the producers and users of coal from the restrictions of supplying and using >34% ash coal.

Latest Gazette notification dated 21^st May 2020

The Gazette notification dated 21^st May 2020 is unique in the sense that it gives the background of the need for the changes (without any techno-economic evidence) and then finally the order by the MoEFCC.

It will be pertinent, therefore, to analyze the stands of the different Ministries in evolving the new rule. Ministry of Environment, Forest and Climate Change justifies abolition of the earlier rule based on the inputs from the related administrative Ministries of Power and Coal and the NITI Ayog, which as per the Gazette notification is as follows:

“……And whereas, the Ministry of Power has, inter alia, represented that with advancement in pollution control technologies, thermal power plants are better equipped to capture fly-ash generated in combustion process and unwashed coal can be used more efficiently and economically; thermal power plants are designed for coal with wide variety of ash content and are equipped with dry ash evacuation, handling and supply systems for ash utilization; using washed coal makes power generation costlier; fly ash generated in thermal power plants is being used in several beneficial uses like cement manufacturing, brick making, road laying, back-fill material for reclamation of mine voids and low lying areas; requirement of maintaining average ash content to 34% prompts industries to undertake import of coal, resulting in outflow of foreign exchange etc. 

And Whereas, the Ministry of Coal has, inter alia, represented that the coal mines are constantly striving to improve raw coal in terms of quality, size and extraneous material over the years which has considerably reduced wear and tear of all related equipment, coal washing process involves multiple handling and avoidable road transportation of huge quantities of coal from coal mines to washeries and then to rail sidings for onward transport to power plants; the washing process only  divides the coal into washed coal and washery rejects while the ash content of mined coal remains the same; use of low grade coal washery rejects, in the multiple small user industries, generates more pollution etc.

And Whereas, the Ministry of Coal and Ministry of Power have, therefore, represented that the mandating power plants to use washed coal requires to be revisited by reconsidering the notification dated the 2nd January, 2014 which will help ease power generation for long distance haulage of coal without adverse impact on the environment. 

And Whereas, the NITI Aayog, in its report after analyzing the issue from the perspective of washeries, Coal mining, transportation and consumption of coal at power plants has, inter alia, summed up that use of washery rejects in nearby industries generates more pollution; since washery rejects are distributed in number of smaller industries, the pollution control at numerous points is more difficult than controlling the pollution at power plant end; Ash generated in the washing process pollutes water along with coal particles and cannot be gainfully utilized; Coal washing process involves increased water use, effluent generation; Disposal of washery rejects has negative environmental impact as it has to handle and dispose huge quantity of low grade coal washery rejects, liquid effluent streams, coal storage, handling coal dust, runoff and fugitive dust; Coal washing also adversely impacts topography, water drainage pattern and quality, water bodies, surrounding air quality at large scale; Washing process increases the cost of power generation with no commensurate environmental advantages etc. 

And Whereas, NITI Aayog has, therefore, recommended that it may be prudent to determine and enforce the environmental and pollution norms, to be complied with by the power generators, rather than restricting the ash content in coal, based on distance of transportation…..”

Ministry of Environment, Forest and Climate Change, after analyzing the above inputs has substituted the sub-rule (8) of rule 3 of the EPR, 1986 with the following provisions:

“(8) Use of coal by Thermal Power Plants, without stipulations as regards ash content or distance, shall be permitted subject to following conditions: 

(1)         Setting Up Technology Solution for emission norms:

(i)    Compliance of specified emission norms for Particulate Matter, as per extant notifications and instructions of Central Pollution Control Board, issued from time to time.

(ii) In case of washeries, Middling and rejects to be utilized in FBC (Fluidized Bed Combustion) technology based thermal power plants. Washery to have linkage for middling and rejects in Fluidized Bed Combustion plants. 

(2)         Management of Ash Ponds:

(i) The thermal powers plants shall comply with conditions, as notified in the Fly Ash notification issued from time to time, without being entitled to additional capacity of fly ash pond (for existing power generation capacity) on ground of switching from washed coal to unwashed coal.

(ii)  Appropriate Technology solutions shall be applied to optimize water consumption for Ash management;

(iii)The segregation of ash may be done at the Electro-Static Precipitator stage, if required, based on site specific conditions, to ensure maximum utilization of fly ash;

(iv)Subject to 2(i) above, the thermal power plants to dispose fly ash in abandoned or working mines (to be facilitated by mine owner) with environmental safeguards. 

(3)        Transportation:

1. Coal transportation may be undertaken by covered Railway wagon (railway wagons covered by tarpaulin or other means) and/or covered conveyer beyond the mine area. However, till such time enabling Rail transport/conveyer infrastructure is not available, road transportation may be undertaken in trucks, covered by tarpaulin or other means. 
2. It shall be ensured by the thermal power plant that

a.  Rail siding facility or conveyor facility is set up at or near the power plant, for transportation by rail or conveyor; and

b.  If transportation by rail or conveyor facility is not available, ensure that the coal is transported out from the Delivery Point of the respective mine in covered trucks (by tarpaulin or other means), or any mechanized closed trucks by road. 

(4)  This shall also be deemed to be additional conditions of the relevant Environmental Clearances for respective projects for financial year 2020-21 and onwards. The existing Environmental Clearances shall stand modified so as to make the above conditions operative for relevant sectors. The Consent to Operate shall be issued by respective State Pollution Control Boards accordingly.”

Points to ponder in the new sub rule (8)

Complete substitution of sub-rule (8) with the above provisions has the following points to ponder:

1. Restriction on use of >34% ash coal in distant power plants (>500 km away from the mine) has been completely withdrawn, yet asking the power plants to meet the environmental standards as they were permitted with usage of <34% ash coal.
2. In case of washeries, Middling and rejects to be utilized in FBC (Fluidized Bed Combustion) technology based thermal power plants.
3. The thermal powers plants shall not be entitled to additional capacity of fly ash pond (for existing power generation capacity) on ground of switching from washed coal to unwashed coal.
4.  Thermal power plants to dispose fly ash in abandoned or working mines (to be facilitated by mine owner) with environmental safeguards. 
5. Coal transportation may be undertaken by covered Railway wagon (railway wagons covered by tarpaulin or other means) and/or covered conveyer beyond the mine area.

Middling is generated in coking coal washeries only for its utilization in the power plants, generally at 34% ash. The third product in such washeries is reject with ash as high as 65%. While it may not be desirable to burn the rejects and dispose it in the mined-out areas, the middling so far have been transported to the power plants and used as washed coal. Mandating use of middling in FBC plants is beyond my comprehension, while mined coal with any ash content can be transported and used in any power plant.

In case the power plants will not be allowed to create additional capacity of fly ash pond and they are mandated to transport it back to the mine for its disposal in mined out areas, the logic of transporting this additional ash to the power plant and again bring it back to the mine is also not understandable. Who is going to bear this additional cost? Also, transporting fly ash requires special vehicles and with large distances involved, the costs are going to be prohibitive.

Wagons covered with tarpaulin is a rare feature to be seen anywhere in India. While this may be desirable, its practicality is difficult to adopt. It is also an imaginary thinking that until such facility is created by Railways, coal should be transported in covered truck over long distances.

Economic and Environmental impact of using unwashed (>34% ash) coal

I have tried to make an assessment of economic and environmental impact of using unwashed coal vis-a-vis mined coal in distant power plants. First let us understand the quality of non-coal resource we have in our country.

Indian Non-coking coal resource

Total inventory of non-coking coal resource in India, estimated by Geological Survey of India, as on April 1, 2019, stands at 289.87 billion tonnes, of which 37.75 billion tonnes exist in superior grades (G1 to G6) with GCV of >5500 kcal/kg. Larger portion of 224.7 0 billion tonnes are available in inferior grades (G7 to G17) with GCV from 2201 to 5500 and about 27.42 billion tonnes in ungraded category. The following table reflects the grade-wise non-coking coal resource:

Grade	Gross Calorific Value (GCV)	Resources (million tonnes)
G1 – G3	>6401	2,733.41
G4 – G5	5801 -6400	10,213.96
G6	5501-5800	24,802.60
G7 – G8	4901 - 5500	43,348.45
G9 – G14	3101 - 4900	178,279.71
G15 – G17	2201 - 3100	3,073.68
Ungraded		27,415.95
Total		289,867.86

The above table shows that we have larger resource (178 BT) in grades G9 to G14 (more in the lower grades) and about 30 BT in G15 and below. Lower the grade, higher is the ash content.

Case study

Let us now consider three cases with ash contents of 34%, 40% and 50%. In order to determine the GCV equivalency of these ash coals, the equivalency formula developed by the erstwhile CFRI based on a wide range of samples collected from different coal fields has been used, which is as follows:

GCV = 2111 + 0.6812xUHV.

Considering an average moisture content of 5%, the equivalent GCV of such coals would generally be

For 34% ash coal - 4500 kcal/kg (G10),

For 40% ash coal - 3950 kcal/kg (G12), and

For 50% ash coal - 3400 kcal/kg (G13).

Specific coal requirement of a 500 MW power generator

A 500 MW plant with a Heat Rate of 2500 kcal/kWh and a PLF of 80% would require the following amount of coal for the three different ash types:

34% ash – 1.95 million tonnes/annum

40% ash – 2.22 million tonnes/annum; an increase of 14% in cost of transportation of coal and 6% in cost of transportation of additional ash back to the mine, compared to the base case.

50% ash – 2.58 million tonnes/annum; an increase of 32% in cost of transportation of coal and 16% in cost of transportation of additional ash to be returned to the mine, compared to the base case.

The above are the theoretical coal requirements. In actual practice the requirement would be more than the theoretical one as higher ash coals consume more heat in heating the inert matter (ash) and the same is not recovered for generating steam and is thus, considered as lost heat. Such lost heat is made up by injecting oil or additional coal in the boiler. By no stretch of imagination, the above additional minimum costs are going to be economical for the power plants and the additional costs will have to be borne by the public, the users of power.

Impact on carbon emission

Let us now consider impact of using higher ash coal on carbon emission. Coal on combustion generates carbon dioxide which is a greenhouse gas. The intension of any Government of the day in any country is to reduce generation of CO₂ by adopting cleaner coal technologies. CO₂ generation is governed by the carbon percentage in coal determined through ultimate analysis and not the fixed carbon percentage determined through proximate analysis. Actual carbon percent in coal does not reduce proportionate to the ash content as the volatile matter too plays a vital role. Thus, usage of higher ash coal means increased quantity of coal burning and consequent increased generation of CO₂ (more the ash in coal more is CO₂).

Form the above it is evident that usage of higher ash coal in distant power plants not only increases the cost of production of power but also generates disproportionately higher quantities of CO₂ for the same amount of power generation.

Cost consideration

Apart from many arguments against coal washing it has been argued in the justification note of the new rule that washing process increases the cost of power generation with no commensurate environmental advantages. It has also been argued that washed coal costs more and hence becomes uneconomical for the power plants. I wonder, if it was true, how the power plants imported more than 135 million tonnes of coal in 2018-19 for the hinterland plants. This much quantity of import for the hinterland plants cannot be justified on account of shortage of domestic coal only but to my knowledge, a larger portion of it is imported on economic considerations. Cost of imported coal is much higher compared to that of domestic washed coal. Even as on today, in the corona period, when the power coal demand is low internationally, the price of Indonesian coal (as on 25^th May 2020) is higher in terms of per million calories on FOB basis, compared to equivalent GCV Indian coal. In spite of higher cost, the consumers prefer to use imported coal primarily on economic benefit ground.

GCV NAR kcal/kg	Price ($/t)	Price (INR/t)	Price (Mcal/t)	Price/Mcal (INR)
4800	42.5	3187.5	4800	0.66
3800	29	2175	3800	0.57
3400	24	1800	3400	0.53

Compared to these, the price of washed coal is much less and cannot be considered uneconomical for the power plants. The price of CIL’s unwashed coal (basic price) varies from INR 0.19/Mcal for G17 (GCV 2201-2500 kcal/kg) grade to INR 0.48/Mcal for G2 (GCV 6701-7000 kcal/kg) grade. With additional 40%on taxes and royalties, these work out to INR 0.27/Mcal and INR 0.67/Mcal respectively as pithead cost. This indicates that domestic coals, even washed ones are cheaper compared to imported coal for the same heat value and just should not be wished away on unsubstantiated economic ground.

Source: Coal India Ltd. Website

The above chart shows how irrational is the pricing for domestic coal. There is no incentive for improving the grade from G14 to G9 (price per Mcal remaining same). There needs to be some sort of linearity in pricing coal so that there exists some incentive for grade/GCV improvement. Washing of Indian coal reduces nearly 3.5% yield for every 1% reduction in ash. Naturally, lots of rejects are generated of no value in bringing the ash content to 34%. The price of washed coal, therefore, is bound to be higher. Still when compared to imported coal it is cheaper in terms of heat value. The contention that washed coal increases cost of power generation is, thus, not substantiated. If, at all it be so, there is a need to restructure pricing of coal and not wish away the washed coal. It may be worth mentioning here that internationally, it is difficult to imagine a mine without a beneficiation/washing plant.

Conclusions

In view of the foregoing, it may be concluded that doing away with the restriction of using >34% ash coal or in other words, withdrawal of the concept of non-coking coal washing in India is not a right step. With the quality of coal resource India has, impact of this rule will have a long-term effect on both economics of power generation and its carbon footprint. Use of improved quality of coal with domestic poor grade coals will be essential for controlling the cost of power generation and this new rule may only pave way for increased import of non-coking coal in future.