Up In Smoke: Fires Dot The Jharia Coalfields, Burning Up Precious Coking Coal.

UP IN SMOKE: Fires dot the Jharia coalfields, burning up precious coking coal.

by The Hindu

13th February 2006

EFFORTS ARE on to impart momentum and generate political consensus for a massive rehabilitation programme at the Jharia Coalfields that contains top quality coking coal which is literally going up in smoke due to past unscientific mining practices. It is only by consensus and political will that such a programme can be implemented successfully and in a time-bound manner. The benefits are manifold and they cascade through a multiplier effect.

At a time when substantial capacity expansions are on the anvil of the Indian steel industry, any scope for raising the indigenous availability of one of the most critical inputs for the industry - prime coking coal - needs to be taken seriously more so if it also helps in unlocking the value of a perennially sick coal-producing company.

Currently the public sector coal company in question, Bharat Coking Coal Ltd, is trying to implement the Jharia Action Plan (JAP) with which its long-term survival is linked. "Revitalisation of the Jharia Coalfields holds the key to providing substantial coking coal inputs for the growing steel industry - but it also offers tremendous benefits for the ailing BCCL which is now on the threshold of a turnaround," says BCCL CMD, P. S. Bhattacharyya.

By making Jharia free of habitation, large coking coal bearing areas would become available enabling BCCL to move into opencast mining against its present practice of underground mining which is getting to be an increasingly losing proposition. As many as 41 of the 62 mines suffer losses of more than Rs. 1,000 per tonne.

Massive rehabilitation

So what is this action plan all about? Mind boggling though this may sound, the JAP involves the shifting and rehabilitation of about three lakh people staying in these areas where mine-fires, some raging since the pre-nationalisation days, are common. The fires, caused by slaughter mining, also burn up prime grade coking coal (some 37 million tonnes have already been lost) and an intrinsic part of the plan is to shift the people to safer areas while putting out the fires, save the coal and commence opencast mining. The plan, formulated in 2003, has been updated and is expected to cost about Rs. 5,700 crore.

Interestingly, a rehab programme of similar dimensions carried out at the Upper Krishna project in Karnataka is being used by the implementation team as a learning experience. BCCL officials told The Hindu that a highly dedicated team of officers had smoothly carried out an even bigger rehab programme. As part of the pre-implementation programme of JAP, a team from BCCL has already visited Karnataka.

Originally the JAP was formulated following an apex Court directive on a PIL case filed by Haradhan Roy, ex-MP. A master plan in 2003 spread the work out over 20 years. The current thinking, in line with the views expressed by various agencies including the Planning Commission (which took an appraisal meeting on this in 2005), is to crash the time frame by half. A total of 65,000 houses will have to be constructed to accommodate three lakh displaced persons.

Opencast mining plans

The Jharkhand government has already notified the formation of the Jharia Rehabilitation Development Authority. Its main task is to construct quality townships for shifting people to non-coal bearing areas. Alongside, BCCL will be required to provide alternative accommodation to its employees living in the endangered areas. The JRDA and BCCL are expected to implement this task with help from the Housing and Urban Development Corporation creating considerable economic activity in the construction sector.

The rehabilitation programme will obviously leave a large part of the Jharia Coalfield vacant and amenable for development by opencast mining. The reserves of high quality coal here are estimated at 4.6 billion tonnes. According to estimates made by India's largest steel producer, the Steel Authority of India Ltd., with steel production increasing to about 65 million tonnes by 2011-12, the annual coking coal demand would increase to about 45 million tonnes. Out of the 93 billion tonnes of indigenous proven reserves of coal, only about 13 per cent is coking coal and the rest thermal coal. Of this, 28 per cent is prime coking and the rest medium or semi-coking coal. Blast furnace needs 70 per cent prime and 30 per cent medium coking coal.

Accordingly prime coking coal availability has been identified as a major constraint for growth of the Indian steel industry. As per the present planning, the current coking coal production of eight million tonnes will be increased to 18 million tonnes by 2024-25 against the steel industry's projected demand of 97 million tonnes. It is in this context that the JAP assumes significance and demands priority action.

The potential to increase output that opening up of areas of Jharia coalfield has, can be gauged from the recent opening up of the fire-affected Dhanbad-Patherdih railway line (where tracks had to be dismantled). More than a million tonnes of coal is being produced in the current fiscal as a result of opening up of a miniscule portion of the Jharia coalfields. As BCCL tries to enter a phase of consolidation, it has identified these high value deposits as its golden goose. "Volume is important, but so is value creation," says the BCCL CMD, who sees the JAP as an integral part of the company's sustained revival. "Jharia revitalisation will enable BCCL to generate enough revenue to wipe out its Rs. 10,000 crore accumulated loss incurred so far and then yield returns on the huge investment made with tax-payers money," says Mr. Bhattacharyya.

No funding problem

How is the JAP to be funded? This is not seen to be a problem. BCCL's holding company, Coal India Ltd., has levied a charge of Rs. 6 per tonne on its profit-making subsidiaries for the last two years to raise funds for Jharia and Ranigunj rehabilitation. This is expected to generate about Rs. 400 crore annually. Stowing excise duty, levied on all types of coal (coking and non-coking), has been increased to a uniform level of Rs. 10 (from Rs. 3.5 for non-coking coal and Rs. 4.25 on coking coal).

This is expected to generate a corpus of Rs. 240 crore per year. Moreover, by its fire mitigation programme BCCL hopes to earn carbon credits and qualify for funding under the clean development mechanism (CDM) of the Kyoto Protocol.

Pre-implementation work like survey and land acquisition are now on in full swing and the project is set for a 2007 launch. The people of Dhanbad are now looking forward to a new dawn linked as their existence is to the well-being of BCCL. Talking to this correspondent, miners at the Moonidih mine said that they were now a happy lot, taking home their pay and PF dues within the due date. This has come about with BCCL's improved finances. But their dawn might just turn out to be a false one if political will is found lacking, when the time comes for actual relocation. It is seemingly a win-win situation for all - the coal companies, the steel sector and the local populace - except for a section of those who have stayed in these areas for long and have developed various vested interests.