The government will offer a 50 percent discount on revenue sharing with states for those doing underground mining in commercial mines, Union Minister for Coal, Mines, and Parliamentary Affairs Pralhad Joshi told Moneycontrol in an interview.
"It has been decided that for those entering underground mining through commercial coal mining, a 50 percent discount on revenue will be offered. Underground mining is less polluting compared to surface mining. In the future, we are even open to increasing the concession beyond 50 percent, if needed," he said.
Since phasing out coal is not an option for India as of now due to its burgeoning power demand, the government is looking at ways to mine the fossil fuel in an environmentally responsible manner. Of the two types of coal mining practiced across the world, India is currently heavily dependent on the opencast mining method, which is a surface mining technique that extracts minerals from an open pit in the ground.
The other technique is the underground mining method, which currently accounts for barely 4 percent of India's total coal mining output. It is faster and extracts much higher quantities in one go with better-quality coal.
However, opencast mining, despite being cheaper than underground mining, has its disadvantages, such as higher pollution due to overburden removal, costs of land acquisition followed by rehabilitation and resettlement issues, and displacement of forest cover.
The government, therefore, announced in June this year that Coal India Limited (CIL), the country's biggest coal miner, will quadruple its underground mining production to 100 million tonnes (MT) by 2030 from the current 25.5 MT per year.
50% rebate for coal gasification too
The Union minister said a similar rebate will be offered for coal gasification projects.
"It has been decided to offer a 50 percent rebate in revenue share for the coal used for gasification, provided the quantity used for gasification is at least 10 percent of the total coal production. Besides, CIL and SSCL (Singareni Collieries Company Ltd) have added a new subsector for the auction of coal linkages to the non-regulated sector for coal gasification," Joshi said.
The minister added that the coal gasification scheme will soon be put up before the Union Cabinet, after which it will be formally launched.
Gasification of coal is a process in which coal is partially oxidised by air, oxygen, steam, or carbon dioxide under controlled conditions to produce a fuel gas known as syngas. Syngas or synthesis gas can be used for power generation and to make methanol as well.
The Indian government wants 100 MT of coal gasification by 2030, with investments worth over Rs 4 trillion.
No PLI planned for heavy mining equipment
Joshi said that as of now, the government has no plans to offer a production-linked incentive (PLI) for heavy mining and construction equipment manufacturing.
"As of now, we do not have any plan to offer PLI (production-linked incentive) for this. We are only telling our PSUs and even private players participating in our coal blocks and now critical mineral auctions to buy 'Made in India' machinery even if it may be 5-10 percent higher in costs," he said.
Currently, CIL, India's biggest miner, imports high-capacity equipment, such as electric rope shovels, hydraulic shovels, dumpers, crawler dozers, drills, motor graders, and front-end loader wheel dozers, valued at Rs 3,500 crore, incurring additional expenses of Rs 1,000 crore in customs duty.
It has devised a strategic plan to phase out imports of heavy earth-moving machinery (HEMM) and underground mining equipment over the next six years, the Ministry of Coal said on November 23.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
