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Coal India to invite private investments in 7 coal blocks this week

KOLKATA: Coal IndiaBSE -0.80 % will this week invite companies from around the world to develop seven coal blocks that can produce an estimated 18 million tonnes of coal in a year, triggering potentially the largest private investment in the sector.

"Initial estimates peg the 
investments for opening up the blocks and initiating operations at Rs 3,000 crore, including equipment, land acquisition and rehabilitation, and will be the largest private investment in Coal India," S Narsing Rao, chairman of Coal India, said here on Saturday.

The world's largest coal producer will invite request for proposal from private operators to develop five open cast mines and two underground mines and produce coal under the Mine Developer-Operator (MDO) mode, Rao said at the sidelines of a seminar organised by the Mining, Geological and Metallurgical Institute of India. "We hope to award the contracts by the end of the current financial year," he said.

Private interest in some of these projects is far from guaranteed as they are faced with challenges beyond the control of Coal India.

The Itapara open cast mine project under Coal India subsidiary 
Eastern Coalfields in West Bengal, for example, requires construction of 15 km of new track for which land needs to be acquired, or revival of an old railway line from Chinchuria, for railway connectivity that is likely to take considerable time. In West Bengal, where land acquisition is an issue, Eastern Coalfields will have to acquire 1,108 hectares that will affect 1,254 families for developing the mine.

The Malachua open cast mine under South Eastern Coalfields in Madhya Pradesh, too, will have to rehabilitate 999 landowners and a new railway siding will have to be constructed for around 7 km.

In fact, Coal India had earlier invited request for quotation for these two projects with combined production capacity of 6 mt annually only to receive lacklustre response. The company, however, is more confident of a good response this time after making some changes in the conditions for bidding to allow a larger number of operators to participate. "Having finalised the conditions for participation we will now invite proposals next week," Rao said. Some other projects too have major roadblocks to clear before mine development can start.

The Murpar underground expansion project in Maharashtra under Western Coalfields is still to get forest clearance, which some of its officials say take two-three years. Coal India was looking at Chinese collaboration for the project, which did not work.

The Damodar River Diversion (DRD) open cast mine project, which envisages an annual production of 4 million tonnes, requires completion of the Damodar river diversion project as well as 7.4 km diversion of the Phusro Jarangdih rail diversion project in the area. These two diversion projects were taken up 25 years ago but have yet to take off due to land problems in different pockets in the route of the proposed railway line and the river channel.

The DRD project requires acquisition of 1,097 hectares and some people in the know say villagers are demanding employment beyond Coal India norms and higher rates of compensation to part with their land.

The Jhingurdah bottom open cast mines under Northern Coalfields in Madhya Pradesh — a project with annual capacity of about 2 mt — can be taken up only after a layer of coal above this project's seam is exhausted, which may take another 2-3 years to complete.

The Konar open cast mine under Central Coalfields in Jharkhand, meanwhile, has been withdrawn from the 
MDO (Mine Developer-Operator) list and instead Ara Open Cast in the same area has been proposed as substitute. Coal India is now preparing a new project report. However the connecting road from the mine to the railway siding will have to be strengthened for the project to be successful. Talcher underground project under Mahanadi Coalfields in Odisha is the only one out of the seven projects that is progressing well.