Essar Power and Hindalco Industries on Wednesday moved a step closer to mining in the Mahan coal block, with the Ministry of Environment and Forest according them a Stage 1 forest clearance.
Stage 1 forest clearance gives the players a conditional approval to enter the forest land to plan out relief and rehabilitation, identify alternate afforestation land, etc. Subject to satisfaction of the conditions, Stage 2 clearance is granted, which allows them to cut trees within the mining area and sign the mining lease. Only then can the mining process begin.
“We expect this whole process to take 15-18 months,” said an Essar spokesperson.
Mahan coal block, located in Singrauli, Madhya Pradesh, has a reserve potential of 150 million tonne of thermal coal.
The block was allotted in 2006 to Mahan Coal Ltd, a joint venture between London-listed Essar Energy and Aditya Birla Group flagship Hindalco Industries, which are setting up power projects worth Rs6,400 crore in the vicinity.
Essar Energy has an off-take agreement for 60%, or 5.4 million tonne per annum (mtpa), of coal produced from the block. Its subsidiary, Essar Power, which is targeting a capacity of 10,000 mw in the next 5-6 years, is setting up a 1,200 mw power plant, called Mahan Phase I power project, which is due to be commissioned shortly.
On the other hand, Hindalco, which is setting up a 750 mw captive power plant for its upcoming 359 kilo tonne per annum aluminium smelter called the Mahan Aluminium project, has an off-take agreement for 40% of the produce, amounting to 3.6 mtpa.
“This is a major step forward in our strategy of providing full fuel security for all of our power generation assets, thereby eliminating price and delivery risks,” Naresh Nayyar, chief executive officer of Essar Energy, said in a statement. “We also intend to set the best standard we can in protecting the rights and livelihoods of nearby villagers, restoring forest cover following mining work and conserving wildlife.”