Investment Opportunity in Coal Sector
Coal is a life breadth for any nations infrastructure. India has a huge reserves of coal. It has the fourth largest coal reserves in the world. The total reserves of cal in India is 248 billion tonnes. It is vital for the energy sector. Most of the coal mines in India is used for electrical power generation. Nearly 60% of the electricity is produced using coal.
India is the third largest producer of coal. India produces nearly 360 million metric tonnes p.a. Nearly 143 Blocks having 11% of the total coal reserves for captive use i.e. power generation, steel plants have been identified by the ministry of coal. There are nearly 80 blocks that are either allocated or in the process of being allocated.
Coal Mining Industry Structure
Coal mining is mainly in the hands of public sector. 85% of total coal production in India is done by Coal India Ltd. Private sector privatization is limited to captive mines for steel plants (such as Tata Steel) or for power generation
Government Policy on Coal Sector
Private players are allowed to participate in the captive mines or coal processing for captive mines. All sale of coal is routed through CIL , coal India Limited. Merchant sale is not allowed. It is in the captive mines that FDI is permitted. For FDI, upto 50% no FIPB approval is required. However in case the FDI is higher it requires FDI approvals. The end use of the mining is the major factor that determines the limit of the FDI. For instance:
India is the third largest producer of coal. India produces nearly 360 million metric tonnes p.a. Nearly 143 Blocks having 11% of the total coal reserves for captive use i.e. power generation, steel plants have been identified by the ministry of coal. There are nearly 80 blocks that are either allocated or in the process of being allocated.
Coal Mining Industry Structure
Coal mining is mainly in the hands of public sector. 85% of total coal production in India is done by Coal India Ltd. Private sector privatization is limited to captive mines for steel plants (such as Tata Steel) or for power generation
Government Policy on Coal Sector
Private players are allowed to participate in the captive mines or coal processing for captive mines. All sale of coal is routed through CIL , coal India Limited. Merchant sale is not allowed. It is in the captive mines that FDI is permitted. For FDI, upto 50% no FIPB approval is required. However in case the FDI is higher it requires FDI approvals. The end use of the mining is the major factor that determines the limit of the FDI. For instance:- Mining of coal and lignite for captive consumption for power generation- 100% FDI is allowed
- For steel and cement Industry- 74% of the FDI is allowed
- Coal processing that includes coal washing and sizing- 100% FDI is allowed
Investment and Business Potential
- There is huge potential in coal mining sector. By 2012 the demand of coal would increase upto 800 MMT p.a.
- There is still shortage of coal and this shortage is expected to rise to 50 MMT p.a. by 2007
- Due to rapid economic growth there is a surge in the demand of power. This may result in the growth of a Coal sector.
- The shortage of peak power is 12%
- The technology used is old. Hence for better production, there is a need for improved technology, and better productivity at existing mines.
- In the next 10 years the coal sector presents the opportunity of US$ 30-40 billion investment. This investment would be – to explore new coal mines, Manufacture latest mining equipment and technology and create the sound infrastructure for off-take of mined coal
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