State-run CIL will invest around Rs 2,500 crore to set up 20 new coal washeries with a combined capacity of 111.10 million tonnes to unlock the value of its sizeable but poor quality reserves in the country, the government said today.
"Proposed 20 new washeries will be set up on a modified build, operate and maintain (BOM) basis at an estimated cost of approximately Rs 2,500 crore," Coal Minister Sriprakash Jaiswal said while chairing a parliamentary panel here today.
Furthermore, Jaiswal indicated that as a policy decision, all of Coal India Ltd's (CIL) new mining projects with a capacity of 2 million tonnes per annum (MTPA) or above will have in- built washeries to enhance the quality of coal.
Jaiswal said coal washing is being promoted by the government as a clean technology, as a number of studies have shown that washed coal has higher calorific value than unwashed coal, thereby resulting in improved power generation efficiencies. Furthermore, the lower ash content of washed coal results in lower emissions.
Coal is washed to reduce ash content and improve its calorific value. The average ash content in Indian coal is 35 -38 per cent and washing helps reduce it by 7-8 per cent.
The coal washeries will help Coal India, the world's largest producer of the dry fuel, garner a better price for its output.
"With these efforts, the capacity of coking coal washeries will increase from the existing 22.18 MTPA to 43.28 MTPA and the capacity of non-coking coal washeries will increase from the existing 17.22 MTPA to 107.22 MTPA," Jaiswal told the Parliamentary Consultative Committee on Coal.
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The government had earlier said the proposed units -- seven coking coal washeries and 13 non-coking coal washeries -- would be set up by 2017.
At present, CIL operates 17 coal washeries in the country, out of which 11 are coking coal washeries and six are non-coking coal washeries, with a total capacity of 39.40 MTPA.
Committee members were also informed that CIL intends to wash 90 per cent of the coal produced from new mines developed during the XII Five-Year Plan (2012-17). "CIL expects to wash about 90 per cent of the additional coal produced during the XII Plan from new mines," he said.
Coal India, which produced 431.5 MT of coal last year, accounts for over 85 per cent of domestic production of the dry fuel and is the primary supplier for Indian companies.
At present, CIL sells its coal at rates almost 50 per cent cheaper than prevailing international prices, as most of its reserves have poor calorific value and high ash content. The coal washing strategy is aimed at enhancing the value of CIL's output to enable pricing of domestic coal at par with global rates.
CIL hiked prices of different grades of coal by 11 per cent on average last year to Rs 448-2,500 per tonne.
Coal India sells coal at an average price of around $21 a tonne, whereas the nearest source of imported coal, that is, Indonesia, charges around $45 a tonne.
By 2017, CIL expects to sell around 300 MT of washed coal out of its total envisaged production of 647 MT.