India’s coal mines are severely under-utilised amid push for new ones: Report Premium

Though the country experienced supply crunch twice last year, a report suggests new projects under development could be ‘unnecessary’ as only two-thirds of the current capacity is under use

Workers unload coal from a supply truck at a yard on the outskirts of Ahmedabad on October 12, 2021. | Photo Credit: Reuters

On average, India’s coal mines use only two-thirds of the capacity with some large ones using only 1%, says an analysis by Global Energy Monitor (GEM), a firm that tracks utilisation of the fuel-source internationally.

This suggests that 99 of India’s coal mine projects, expected to yield 427 MTPA (million tonnes per annum), under development are unnecessary and opening new coal mines wouldn’t contribute to easing short-term supply-crunches.

At least twice last year, India experienced severe coal crises with more than 100 of 285 thermal power plants seeing coal stocks fall below the critical mark of 25% of the required stock. In over 50 plants, it fell below the 10%. This led to power shortages in several States, including Andhra Pradesh, Jharkhand, Uttarakhand and Madhya Pradesh. 

GEM performed its analysis by surveying  annual reports of Coal India, the largest coal producer in the world, and its subsidiaries and underlines that the company has not listed capacity constraints as among the reasons it fails to reach production targets. Instead, they blame “..competition from renewables, infrastructure impasses, and land-use concerns for hindering output..” the report notes.

Coal mines under development threaten to displace at least 165 villages and affect 87,630 families, of which 41,508 families live in areas where the predominant population is tribal communities. Coal mines under development also threaten 22,686 hectares (ha) of agricultural land and 19,297 ha of forest, and will consume at least 168,041 kilolitres of water per day, comparable to the daily water needs of over one million people, at a time of severe water stress in the country, according to the GEM.

On the heels of Prime Minister Modi’s announcement of a net zero target of 2070, these new mines “...increase India’s likelihood of stranded assets, delay a clean energy future—and in the process pose irreversible impacts on India’s rural communities and environments for the sake of economically precarious mining ventures,” the report underlines.

“The signs warning against the massive expansion of coal mining are easy to see, but the Indian government is not heeding them,” Ryan Driskell Tate, Project Manager for GEM’s Global Coal Mine Tracker, said in a statement. “New mines can’t make the industry’s old problems go away. The irony of this expansion is that opening new mines today could intensify the sector’s weaknesses and inefficiencies tomorrow, especially as competition from renewables and conflicts over land use continue to emerge.”

India’s 427 MTPA of planned new coal mine capacity place it second in the world after China with 596 MTPA.  In some major mining regions, like Jharkhand and Odisha, the industry has over 100 million tonnes in unused capacity at active mine sites, amounting to over 40% of unused mine capacity in those States.

Water shortages would be exacerbated by the new coal projects, increasing demand by 1,68,041 kilolitres per day. Of 427 MTPA in new capacity, 159 MTPA (37%) will be located in high-risk water zones, while 230 MTPA (54%) is planned for zones with extreme water-risk.