As stocks rise, Coal India plans to set up own power plant

Coal India Ltd (CIL) is working out a strategy to set up its own power plant to utilise the huge stocks pile up.

Coal India, world’s largest miner, is considering this move due to lack of good infrastructure to carry the company’s coal to power utilities.

“The stocks need to be utilised and we cannot allow the stocks to pile up beyond a level. There are not enough railway wagons in the country to carry our stocks to the utilities,” said Partha Bhattacharyya, chairman and managing director, CIL.

“It is not a business we would like to be in, because there are already so many players, but if the stocks keep building up, we may not have an option,” Bhattacharyya added.

CIL currently has stockpiles of about 53 million tonnes of coal. The company wants it to come down to 48 million tonnes.

The company is also planning to raise the price of its coal by producing washed coal from its coal washeries. The company is setting up a 111 million tonnes of coal washing capacity. The company will set up 20 coal washeries in the coming years. “The cost of producing coal will go up once we produce washed coal from our washeries”, Bhattacharyya added. CIL is currently selling coal at $21 per tonne. After it starts washing coal, the cost of production will be $27 per tonne.

CIL is coming out with its initial public offer (IPO) on October 18. The government plans to raise between Rs10,000 - Rs12,000 crore.

Ministry of Environment and Forest (MoEF) has classified 44% of the mining area under CIL as ‘No-Go’ area, where no mining activity could be undertaken.

The Ministry of Coal is in discussion with the MoEF to find a way to clear its coal mining area from the category of ‘No-Go’ area.

A committee under finance minister Pranab Mukherjee is reviewing the categorisation of mining area under CIL that has been put under the `No Go’ category.