Coal India Limited (CIL) entered into an equipment and services agreeement with a Chinese company, Zhengzhou Coal Mining Machinery (Group) Company Limited (ZMJ) for the Moonidih project of Bharat Coking Coal Limited (BCCL), a wholly owned subsidiary of CIL.
The project would produce 3.5 million ton of coking coal within four years using longwall mining technology.
Partha S. Bhattacharya, chairman of CIL, said, "CIL entered into an agreement with ZMJ, at a cost of Rs 306 crore, of which Rs 129.88 crore was cost of equipment and the remaining amount the services cost, for a period of five years." Jiao Chenyao, chairman of ZMJ, said, "ZMJ will be using the longwall technology for producing 3.5 million ton of coking coal within five years, but we are aiming to come up with the same production within a targeted rate of four years instead of five.” Jiao claimed, “This project is going to be the benchmark of the industry and this will be a very good start for ZMJ."
The new technology could lower cost of coal production to Rs 1015 per ton against sale price of Rs 1720 per ton. At present, each ton of coal sold meant a loss of Rs 1480 per ton, as the present cost of coal was at Rs 3200 per ton, said Bhattacharya.
Previously, BCCL was looking for a partner which could assure a minimum guaranteed production of 3.5 million ton coal. Tenders were floated and ZMJ was finally shortlisted.
The underground coal production of CIL had slipped from 65 million ton from 1975 to 49 million ton in 2001-02 and 43.2 million ton in 2006-07.
CIL reported 43.4 million ton of underground coal production in 2007-08 and in 2008-09, one million ton more of underground coal would be produced by CIL, claimed Bhattacharya. Several high capacity mines had been selected for enhanced production and expression of interest (EOI) had been floated.
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ZMJ had reportedly expressed considerable interest.
Also, 14 abandoned mines had been selected for renewed production and EOIs had been floated.
Under the annual action plan of the 11th Five Year plan, CIL aimed to produce around 292.93 million ton coal for power sector utilities.
CIL achieved production of about 164 million of coal as against the targeted 161.5 million ton, claimed Bhattacharya.
Coal demand was 253.40 million ton this year as against 237.79 million ton last year, up 6.6 per cent. CIL produced 236.90 million ton of coal between April to November this year, as against 221.46 million ton of coal in the same period, last year.