Kolkata: As Coal India Ltd, or CIL, shifts its focus to underground mining, chairman P.S. Bhattacharyya said the state-run miner would prefer to partner foreign firms over domestic steel makers to develop and revive such mines.
Technology matters: Coal India chairman P.S. Bhattacharyya. Photograph: Indranil Bhoumik / Mint
CIL on Tuesday invited expressions of interest, or EoIs, to jointly revive 18 abandoned underground mines, for which a large number of companies, including ArcelorMittal SA and Tata Steel Ltd have already shown interest. The combined reserve in these mines is estimated at 1.6 billion tonnes.
“Though Indian companies such as Tata Steel, Steel Authority of India Ltd (SAIL) and Rashtriya Ispat Nigam Ltd (RINL) have expressed interest in developing the abandoned mines, I don’t think they have the requisite expertise or technology,” Bhattacharyya told Mint.
“ArcelorMittal had wanted to jointly develop the abandoned mines with us and they, I believe, have the necessary expertise. It will be great if players such as Rio Tinto also submitted EoIs,” he said.
The country’s two biggest steel makers, however, said they were just as capable as any global mining company.
“We are not only a 100-year-old steel company, we are also a 100-year-old mining company. We produce not less than 5 million tonnes (mt) of coal a year,” said a Tata Steel spokesperson, who declined to be named.
“We have technology and expertise for abandoned as well as other underground mines. In fact, we have been running one at Jharia (in Jharkhand) for decades.”
Government-owned SAIL said it has already reached an agreement with CIL subsidiary Bharat Coking Coal Ltd to develop an underground coking coal block in Jharia. “SAIL is operating one of the most geologically difficult mines at Chasnalla in Jharia coal field. SAIL has the potential and the expertise to develop underground mines,” a spokesperson for the company said.
But, RINL said it did not have technology to develop underground mines on its own, and was looking for a foreign partner to develop a coking coal block that was allotted to it in 2006.
“The coal is deep-seated and the mine has a difficult geological structure. We are looking to form a joint venture with Coal India and an international partner to develop the Mahal mine (in Jharkhand). I discussed the proposal with the Coal India chairman a couple of weeks ago,” said RINL chairman and managing director P.K. Bishnoi.
So far, CIL has been mostly mining through the opencast method, in which the coal is extracted from a level near the earth’s surface rather than from shafts. Underground mines accounted for a little over 10% of its total production of 380mt in the previous fiscal, though as many as 250,000 of its employees, or 57% of the work force, are deployed in underground mining.
In April, CIL had invited EoIs to develop and operate seven underground mines with a total estimated reserve of 600 million tonnes.
It received as many as 17 bids from companies such as Rio Tinto, Walter Mining Inc., Anglo American Plc., European Ventures Ltd and a couple of Chinese firms.
Bhattacharyya said he was also open to leasing out these mines to foreign players since they possess superior technology.
Meanwhile, CIL is also planning to introduce highwall mining — an advanced technology for underground mining — in 17 mines owned by it directly or through subsidiaries. “A number of US-based highwall mining specialists have already evinced interest in partnering us,” said R.K. Saha, chairman and managing director of CIL subsidiary Central Coalfields Ltd. These mines could yield as much as 20mt a year by 2011-12, Saha said.
“These 17 mines could be developed by the foreign mining companies independently or through joint ventures with Coal India or its subsidiaries,” Bhattacharyya said.
CIL is aiming to raise its annual production to 520mt by March 2012 and 664mt by March 2017.