‘Give me land, we will give you coal’

The most talked about issue these days is the shortage in coal supplies. What are you doing to mitigate this problem?

The shortage in coal supplies has been for a brief period and right now we have more or less overcome the problem. Until July we were ahead of our production target by 2.5-3% but we slipped in August-September due to incessant rains. Rainfall was nearly three times more than the normal this year and most of our mines, barring Western Coalfields Ltd mines, were flooded. In the open cast mines water went deep inside the mines along with sludge and work on the upper benches could not progress because of continuous rains. Mines were flooded, roads were damaged and so supplies were hampered.

But after October 10, we started restoring normalcy in our production and between October 10 and October 20 we dispatched 140 rakes of coal everyday against 133 rakes normally. Now we have hiked it to 180 rakes a day and will take it up to 210 rakes a day by mid-November. Right now there are no problems of supplies in rakes and railways have promised us to supply these many rakes.

But will you be falling short of your target at the year-end due to the halt in production for two months?

We had set a target of producing 452 million tonne in 2011-2012 and because of our two months\’ slippage, we estimated a shortfall of 24-25 million tonne. But now we are gearing up to increase our production and workers are on duty even on holidays. So we will try to narrow down the gap as much as possible.

But the second half of the year is already overburdened with the target because we spread our whole year\’s production target into 45% and 55% between the first half and the second half. This year in the second half we have lost a month because production normally starts picking up from September but we couldn\’t mine for the entire month. So first we have to achieve our monthly target, then bridge the gap on account of short supplies in September and thereafter the power sector is demanding more since this year most power companies have not gone for imports, which normally takes place in the first half. So right now it is difficult to tell how much of the 24-25 million tonne shortfall can be made up. But we will try our best to narrow down the shortfall as much as possible.

Well, these are short-term measures, but what about the long term? There is a huge demand-supply gap projected in the 12th Five-Year Plan.

There is no way other than increasing production and increasing imports. CIL aimed at achieving 520 mt production at the end of the current Plan period. But we are far below that since we are not getting land, adequate forest and environment clearance to undertake new projects. There are 178 mining projects pending for forestry clearance up from 168 last year and all these projects are in the active mining areas. The forestry clearances, compounded by the Forest Right Act, are pending for five-six years now and more the delays more will be the number of projects pending. So expanding in the active mining areas is becoming increasingly difficult. Without forest clearance you don\’t get land even. If we could start operations in most of the 178 pending mines then we could have easily crossed 520 mt production by the end of 11th Plan period. CIL can take up its production to any limit but for that you need land. Give me land I will give you coal.

But aren\’t there ways of optimising production from the existing mines?

Production can first of all go up if we are relieved from the hurdle of CEPI (comprehensive environmental pollution index). Last year CEPI knocked off 24 mt production. Then law and order problem hampers production and dispatches. Last year we lost 80 man-days for bandhs called by the Maoists in Jharkhand. Again in the MCL (Mahanadi Coalfield Ltd) area local law and order hampers production. We could not operate a 10-million tonne mine in the MCL area for 15 days last year for law and order problem. All these problems still remain. The government has to take care of these issues, if it wants mining to grow. But I should say the local government in the MCL area has tackled the problem a lot.

But departmental production is always lower than outsourced production. Are you thinking of going in for more outsourced production?

True, but private sector miners and government miners are not competing in a level-playing field. Private sector miners deploy workers in more flexible conditions than public sector miners can do. Besides the private sector has the technological advantage since procurement is easier for them. But CIL as a public sector mining company has certain obligations and it ideally should not go for aggressive outsourcing. We outsource around 45% of our production and a mix of 45% and 55% (departmental production) is ideal.

What is the latest on acquiring foreign assets?

Recently we have got a government guideline on taking up stakes in those mining companies where 12% return on investment can be achieved. We are considering picking up stakes in some international mining companies and there is no bar even if we go to take stakes in unlisted properties. But the 12% return on investment is very high and it should ideally be 8-9%. However, the finance ministry said that we would need to take clearance from it for investing in any foreign asset that may give returns below 12%. If we are sure that returns are 12% or above we don\’t need a finance ministry nod. But if a stake acquisition is strategic and returns are below 12%, then we will need clearance from the finance ministry.