Coal India Eyes Forests

The chairman of the world’s largest coal producer, the state-run Coal India Ltd., has a solution in mind to solve the country’s coal shortage: mine forest areas in a big way.

“Our future growth has to come from forest areas,” S. Narsing Rao told India Real Time in a recent interview.

Whether or not to allow mining in forest areas is a controversial subject in power-starved India. Citing environmental concerns, former environment minister Jairam Ramesh banned mining in these areas in 2009, a decision that was overturned this year by his successor, Jayanthi Natarajan.

While it’s technically allowed, getting approvals to mine coal in forests is not easy. Delays in environmental clearances, among other bureaucratic and infrastructure hurdles, are a burden for Coal India, which meets more than 80% of the country’s coal requirement, making it crucial to India’s economic growth.

Coal India has so far focused mostly on non-forest areas. But Mr. Rao said Coal India is now planning new mining projects in forested areas located in three coal producing Indian states: Jharkhand, Chhattisgarh and Orissa.

More than half of India’s total coal resource of 285 billion tons falls in forested areas. However, delays in environmental clearances prevent companies from realizing their output potential. Getting a green light to mine in forest areas can take as much as four years in India. Elsewhere, this is something that typically takes between two to six months, according to Puneet Goel, an independent mining consultant.

This has led the industry to demand a more effective system to secure clearances.

Most of India’s coal-based power stations are operating at low level of coal stocks to generate electricity. The coal shortages, which became significantly worse over the past couple of years, threaten long-range plans to increase generating capacity. The government intends to raise capacity by 44%, to 288 gigawatts, by 2017, most of which will come from new coal-fired plants.

India, the world’s third largest coal producer, mined about 550 million metric tons of coal in the year ended March 31 and imported more than 100 million tons. Imports have more than doubled from about 50 million tons in 2007-08 and are forecast to hit 192 million tons this year.

The shortages–amid Coal India’s stagnant coal production over the past two years— are the main reason of frequent power cuts.

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