India starts first new major coal mine in at least five years

NEW DELHI (Reuters) - Coal India Ltd started production on Friday at a 12-million-tonnes-per-year mine, its first major new project in at least five years, which should help boost supplies to fuel-starved power plants.

The world's biggest coal miner has struggled to raise output fast enough to meet rising demand from power companies, making India the world's third-largest coal importer despite sitting on the fifth-biggest reserves.

Coal India unit Central Coalfields took almost a decade to start digging out coal from the Amrapali open cast pit in Jharkhand, mainly due to delays in land acquisition and lack of a railway network to connect the mine.

Central Coalfields Chairman Gopal Singh said the opening of the mine, its first in decades, was fast-tracked on the orders of new Coal and Power Minister Piyush Goyal, who took charge about 45 days ago.

"The minister has given us strict orders to raise output," Singh said at an event where Goyal inaugurated the mine from a New Delhi hotel using video conferencing.

Goyal said many more such projects were needed to help India provide power to all, a pet project of Prime Minister Narendra Modi, who in May won India's strongest election mandate in 30 years on promises of growth.

India's coal production was 566 million tonnes in the fiscal year ended March 31, but demand was in the range of 715-720 million. Nearly half of India's coal-fired power plants had only enough stocks to last a week or less, Goyal said on July 7.

The Amrapali mine is expected to produce 3 million tonnes this fiscal year, during which Central Coalfields will raise production by 10 percent to 55 million tonnes.

The mine is likely to start producing at full capacity in two years when it is connected to a rail network, Singh said.

Goyal said he is seeking help from state governments to finish projects faster, including railway lines.

Among the other steps Goyal is taking to raise output from Coal India, he is exploring hiring a new chairman from the private sector following the resignation of S. Narsing Rao, a member of the Indian Administrative Service.

"This is to bring about a greater degree of international management practices in government companies also," Goyal said.

(Reporting by Krishna N Das; Editing by Dale Hudson)