CIL arm lines up Rs 20,000 cr capex to ramp up output

Coal India Ltd (CIL) subsidiary Mahanadi Coalfields Ltd (MCL) has unveiled a Rs  20,000 crore capital expenditure (Capex) plan to reach the envisaged output of 250 million tonne (mt) by 2020. MCL is tipped to be CIL’s biggest producer, overshooting South Eastern Coalfields Ltd (SECL) and accounting for a fourth of CIL’s estimated production of one billion tonne by 2020.

“MCL has been given a target to produce 250 mt of coal by 2019-20. For realisation of that target, we are going to open some new mines — Garjanbahal and Siarmal in Basundhara area (in Sundargarh district) and Gopalprasad.

MCL has an ambitious target of investing Rs 15,000-20,000 crore. Most of the money would be invested on infrastructure creation- on rail network, road network and coal loading systems,” MCL’s chairman and managing director A K Jha told Business Standard.

Siarmal in Sundargarh district will have a production capacity of 50 mnt per year, making it the second biggest coal mine in Asia. The Garjanbahal coal mine would produce 10 mnt.

The MCL website informs that there are 18 ongoing coal projects of 151.33 mnt capacity and involving a capital investment of Rs 8315.11 crore.

Ananta, Bharatpur, Balaram, Bhubaneswar, Gopalprasad, Hingula, Siarmal, Basundhara and Kulda are some of the ongoing coal mining projects.

The key requirement for scaling up production are new railway lines, switching over to full mechanisation and full technology adoption, large scale contract mining, upgrading skills of employees, speedy acquisition of land and expeditious environment and forest clearances.

“Coal evacuation and land acquisition are two serious issues. Day by day, land acquisition is getting difficult and this needs to be sorted out. Presently, the rail network is not equipped to handle coal of the order of 250 mt,” said Jha.

To cater to the requirement of enhanced coal handling, MCL in partnership with the Railways, is developing the crucial Jharsuguda-Sardega line and Talcher-Angul rail link. Total expenditure on the rail network would be Rs 2500 crore.

MCL has forged a special purpose vehicle (SPV) called Mahanadi Coal Railway Ltd with Ircon International Ltd and the Odisha government for evacuation of coal.

MCL would have the major stake in the SPV with 64 per cent, Ircon will hold 26 per cent and the rest 10 per cent by state owned Odisha Industrial Infrastructure Development Corporation (Idco). This SPV would take care of rail infrastructure projects, said the MCL CMD.

This SPV will not only cater to the current evacuation need of the company but it will also identify the evacuation constraints, which impede the growth of MCL and accordingly, it will implement the evacuation plans.