Mahanadi Coalfields plans expansion to meet target

November 27, 2007: Mahanadi Coalfields Ltd, (MCL) the third largest subsidiary of Coal India Limited (CIL) in terms of revenue and fourth largest in terms of profit, has chalked out major expansion plans to increase production capacity. They have to do this in order to meet its target for the Eleventh Plan period.

The company, which reported profit before tax and dividend of Rs 1054.44 crore on net sales of Rs 4392.46 crore in 2006-07, has major expansion plans in the pipeline at its two coalfields, Talcher and Ib Valley, both in Orissa

According to available information, the company has 33 sanctioned mining projects with a capacity of 103.31 million tons per annum (mtpa) of coal. While the total capital outlay of 33 projects is Rs 3436.92 crore, only 16 of them, with a total capacity of 43.23 mtpa have been completed at a sanctioned capital investment of Rs 1714.49 crore.

Three opencast projects, with a capacity of 35.0 mtpa are awaiting approval. Their advance action proposals have been approved and under implementation. The projects are Garjanbahal, Gopalprasad and Talabira-III, with capacities of 10 mtpa, 10 mtpa and 15 mtpa respectively.

In addition to these three, four other opencast expansion projects with total annual incremental capacity of 30.50 mtpa, are also awaiting the approval of government of India. These projects are part if the emergency Gopalprasad coal production plans of CIL. The projects are Bhubaneswari, Kaniha, Bharatpur Phase III and Lakhanpur, with incremental capacities of 10.0 mtpa, 6.5 mtpa, 9.0 mtpa and 5.0 mtpa respectively.

Apart from these, there are 19 other ongoing projects with various incremental capacities. They are: Natraj U.G. (0.64 mtpa), Jagannath UG (0.67 mtpa), Talcher (W) U/G (0.52 mtpa), Hingula - II (2.00 mtpa), Hingula - II. Phase - II (4.00 mtpa), Bharatpur Phase - II (6.00 mtpa), Lingaraj (5.00 mtpa), Basundhara (West) (2.40 mtpa), Lakhanpur (5.00 mtpa), Belpahar (1.50 mtpa), Samaleswari (1.00 mtpa), Samaleswari Phase - II (1.00 mtpa), Ananta Phase - II (6.5 mtpa), Kulda (10.0 mtpa), Bhubaneswari (10.0 mtpa), Kaniha (3.5 mtpa), Jagannath Phase-II (2.00 mtpa) and Lingraj Phase-II (3.00 mtpa).

These projects have a total capital outplay of Rs 1729.56 crore, and are under various stages of implementation.

Meanwhile, the company has entered into a joint venture agreement with four private companies to mine coal from the Utkal-A-Gopalprasad block west project located in Talcher area of Orissa's Angul district.

Mahanadi Coalfields Ltd have signed agreements under public private partnership (PPP) mode with JSW Steel Ltd, JSW Energy Ltd, Jindal Stainless Ltd and Shyam DRI Power.

The chairman and managing director of MCL, S.R. Upadhyay, said that the company would have 60 percent share in the proposed venture, while JSW steel and JSW Energy will have 22 percent share, and nine percent each would be owned by Shyam DRI Power and Jindal Stainless Steel Ltd in the Rs 465-crore proposed company to be named as Mahanadi Jindal Shyam DRI Company Ltd (MJS DRI Company).

Upadhyay said the proposed company was scheduled to produce 15 mt of "F" grade coal, 40 percent of which will be used by the joint venture partners in the private sector for captive consumption in their plants located in Orissa, while balance the 60 percent will be marketed by MCL as per the approved coal linkages of the Central government.

This is the second joint venture of MCL after its joint venture between Neyveli Lignite Corporation and Hindalco of Aditya Birla Group for mining of coal in Talabira Block under Jharsuguda district of the State, Upadhyay informed.

Given the rising trend in prices, the prospect of the coal industry was bright and by the end of 2020, Orissa will produce about 40 percent of the total coal production in the country, said Balabhadra Mahapatra, director of MCL. Efforts were on to get necessary clearances from the concerned authorities for land acquisition and work on the project would start soon, Upadhyay said.

The Talcher Coalfields under MCL, which was first discovered at Gopalprasad in 1837, was a part of Coal India mines and were in CCL and then in SECL before formation of MCL in 1992. Over the years, the production of coal was raised from 0.91 million tons in 1972-73 to 45.48 million tons in 2005-06.

The Ib Valley Coalfields, also under MCL, which was first discovered by B N Railway while constructing a bridge over the lb river in 1900, was a part of Himgir Rampur Coal company opened colliery in 1909. After the nationalisation of coal mines, the mines came under Western Coalfields Ltd. Later, it came under SECL and then under MCL in 1992 after its formation.

Production of this field was 0.55 million tons in 1972-73 and it increased up to 24.12 million tons in 2005-06.

MCL is fully conscious of quality needs and has adopted consumer driven quality approaches. It has been doing 100 percent sizing as per consumer's demand.

Besides this, MCL has conceptualised coal beneficiation plans for consumers located beyond 1000 km. Moreover, a positive step has already been taken to install two deshaling plants and washeries on Built-own-Operate (BOO) basis in Talcher coalfield.

In terms of safety measures, MCL has been striving continuously for improving safety awareness among the employees through observance of safety week, seminars, safety education and vocational training programmes. The company aims to achieve zero accident potential.

Mahanadi Coalfields has registered an increase in coal production. From 66.08 million tons in 2004-05, it reached 69.06 million tons in 2005-06, thereby registering a growth of 4.50 percent. In 2006-07, its production jumped to 80.00 million tons thereby registering a growth of 15.84 percent.

Coal Offtake

The offtake of coal to various consumers were done in different modes like rail, road, belt and others. However the major quantity was done by the rail mode. Since the formation of the company, the offtake of coal has shown a continuously rising trend.

For the sector wise offtake, the major share was for power at 48.701 million tons in 2005-06 and it increased to 51.692 million tons in 2006-07. For the steel sector, it contributed 3.942 million tons in 2005-06 and for 2006-07 it was 3.418 million tons. For other sectors in 2005-06, it was 15.249 millions ton and 21.150 million tons.

The net sales of the company in 2004-05 was Rs 2897.67 crore and in 2005-06 it went up by 9.04 percent to Rs 3159.67 crore. In 2006-07, the net sales of the company went up by 17.50 percent to Rs 3712.75 crore.

The profit before tax and dividend for 2004-05 was Rs 1469.36 crore and in 2005-06 it went up by 25.03 percent to reach Rs 1837.21 crore. In 2006-07, the profit earned by the company was up13.29 percent to Rs 2081.39 crore.

Source:Coal Insights