ABOUT BCCL AND CIL AND THEIR CONTRIBUTION IN INDIAN GROWTH STORY.

BCCL, one of CIL’s subsidiaries, with access to prime reserves of scarce coking coal in the country, has
been making loss since inception. It meets about 50% of the total prime coking coal requirements of the
integrated steel sector. About 18.5% of toal coal production of BCCL consists of Coking coal. The area
falls in Jharia Coalfield and partly in Ranigunj Coalfield. It commands a share of 5.87% of all India coal
production.

The major consumer of BCCL is the power sector. It caters to the need of different power plant spread
across India. The main power house linked with BCCL are Tamil Nadu Electricity Board, Calcutta
Electric Supply Corporation, Thermal Power Station of Badarpur, Bhatinda, Lehra Mohabbat, Ropar,
Unchahar, Harduagunj, Panki, Paricha, Tanda, Bokaro, Handerapura, Mejia, Budge-Budge , Santhaldih,
Muzaffarpur, Barauni and Panipat. Besides these, the captive power plants of Bokaro Steel Plant and
Durgapur Steel Plant consume middling’s beneficiated coal.

The other important sectors are the steel sector, fertilizer sector, cement sector and other non-core
sectors like refractories, rolling mills, dying and chemical, glass and potteries, paper, bangles etc.The
Indian coal deposit has comparatively low sulphur content and so is better placed in its usage against the
green house effect.

Coal, if properly managed, will reduce the input cost of its industrial consumers and thereby reduce the
cost of the industrial output like electricity generated, steel, fertilizer, cement, dyes, chemicals and a
whole plethora of products that touch nearly all segments of the Indian economy. This has a huge impact
on the quality of life in India, right from the rural sector to the urban sector. In this sense coal can be
called the wheels on which the Indian economy runs.

It is an interesting case in point that the Bharat Coking Coal Limited has huge coking coal reserves (the
only reserve in India), huge manpower (with required talent and experience) and other required
infrastructure but was still incurring losses since inception. The near monopoly and great demand of
their coal had not been able to do any good to the company. Globalisation and deregulation of coal
prices suddenly reversed the process. There was a dream-like turn over in 2004-05 which made the
organization an example of how a old company can gear up to face modern challenges and emerge a
winner, an example of why a PSU is still the best and ‘steady horse’ to carry the nation forward.

The project deals in detail about coal and all related aspects with a special emphasis on its importance to
the development of the Indian economy, specially now in the face of the economic meltdown and crisis.
It will provide a deep insight into various aspects of the coal story - like the change from a regulated
pricing structure to deregulation in pricing, from a strict government regulated supply pattern to market
demand estimation, from a normal marketing strategy to click technology and viral marketing, the new
distribution policy of coal, reduction in cost and stress on quality, pollution control – Greenfield mining
– carbon credit, Corporate Social Responsibility.

1
ABOUT COAL:
Background

Coal is a naturally occurring combustible rock containing 70% (by volume) carbonaceous
material including moisture. Natural coal, is generated is too dense or fragile and has limited use
as a fuel/reductant in metallurgical plants like blast furnaces. Based on coking property, coal is
broadly classified as coking coal and non-coking coal.

• Coking coal (mostly used by steel plants) are these varieties of coal which on heating in
the absence of air (carbonization process) undergo transformation into plastic state, swell
asn then re-solidify to give cake. On quenching, the cake results in a strong porous mass
called coke. Indian coking coal found in Gondwana has very high ash content (17% or
more) and other properties which results in lower productivity and higher coke
consumption in blast furnace. As a result washing of coal is resorted to lower ash content
to some extent.

• Non-coking coal has poor coking properties which does not soften and form cake like
coking coal during carbonization in coke oven. Such coals with relatively lower ash and
higher fixed carbon are used in power houses, fertilizers and cement plants. Non-coking
coals are classified into different grades A,B,C,D,E and F grades depending upon its heat
value is fraction of carbon, volatile matter and ash content in the coal.

During the last 58 years, the coal production in the country has grown at a CAGR of 4.6% and
post nationalization, coal production increased at a CAGR of approx 5%.

India position in the coal producing countries:

Coal is the most important and abundant fossil fuel in India accounting for more than 55% of the
country’s primary energy needs as against only 27% for the world as a whole. The coal reserves
of India up to a depth of 1200 meters have been estimated by the Geological survey of India
(GSI) at 261.211 billion tonnes as on January 1st, 2008.

WORLD COAL SCENARIO

2
Coal reserves are available in almost every country worldwide, with recoverable reserves in
around 70 countries. At current production levels, proven coal reserves are estimated to last 133
years. In contrast, proven oil and gas reserves are equivalent to around 42 and 60 years at current
production levels respectively. Over 67% of oil and 66% of gas reserves are concentrated in the
Middle East and Russia.

Global Coal: Proved Reserves at End of 2008

BP Statistical Review of World Energy 2007

Top Coal Exporter Countries

3
 Top Coal Importers (2007)

It is ironical, though India is the third biggest producer of coal, it is also one of the largest
importer of coal. Previously coking coal comprises major share of import which accounts for

4
approx. 60% of total imports in 2003-04 but due to increase in production led by BCCL, it is
accounting for about 44.24% for the year 2007-08 of its total coal imports.

Trend of coal imports of coal in India (Quantity in millions tonnes)

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Coking coal 13 16.925 19.891 17.877 22.029 24.00
Non coking coal 8.7 12.025 21.695 25.204 27.765 35
Total imports 21.7 28.95 38.586 43.081 49.794 59
The per capita primary energy consumption in India at 482 Kg of oil Equivalent (KGOE) per
year much lower than compared to some developing countries and world average of ……….
Driven by the rising population expanding economy and quest for improved quality of life,
energy usage in India is growing by leaps and bounds. Considering the limited reserves of
petroleum and natural gas, eco-conservation, restriction on hydel project and geo-political
perception of nuclear power, coal will continue to occupy center stage of India’s energy scenario.

Domestic Demand 2008-09:

India had assessed the demand of Raw Coal for 2008-09 at 550.00 Mill Tonnes (Mt) (including
colliery consumption and export). Against this demand, indigenous supply was expected at
497.29 Mt and materialization through import was to be at 53.17 Mt (coking - 17.80 Mt, non-
coking - 35.36 Mt.) Actual Supply of Raw coal was at 489.85 mill tonnes from indigenous
sources, whereas import estimated to have taken place is 59.0 Mill Tonnes, comprising of 24 Mt
of coking and 35 Mt of non coking coal, during the year 2008-09.
Sector wise demand of coal 2008-09:

Sector Target (MT) Actual (MT) Achieved

Steel 18.74 16.84 88%
Power(U) 36.69 344.57 102.3%
Power (Captive) 44.16 29.92 67.7%
Sponge Iron 25.19 19.33 76.7%
Cement 13.76 15.28 111.1%

Trend of domestic demand supply over the years:

2002-03 2003- 2004- 2005- 2006- 2007-08

5
 04 05 06 07
Domestic coal supply 361.246 382.61 407.03 430.83 457 492.945
5 9 2
Total demand 379.405 407.51 430.83 462.34 502.81 548.383
3 2 5 8
Demand- supply gap 18.159 24.898 23.793 31.51 45.736 55.438
Materialization through 21.683 28.95 38.586 43.081 49.94 59
import
Overall gap 3.524 4 14.793 11.568 4.204 3.562
The reason behind the shortage of coal are numerous- slippage in implementation of projects,
inadequacy of policy framework and lack of appropriate infrastructure. For Indian coal
companies, project planning, approval and execution constitute a long drawn out process. Some
of the key reasons for slippage in implementation of projects include:

• Delay due to land acquisition, rehabilitation process and process of compensation to the
displaced population

• Delay due to fund constraint as many of the CIL subsidiaries are not having adequate
fund for capex

• Delay due to adverse geo-mining conditions

• Delay due to Environmental Management plan clearance

• Delay due to change in mining technology

As on 31.12.2006, out of total 487 mining projects of Coal India Limited (CIL) each costing Rs.2
crores & above, 355 projects stand completed (including projects where coal reserves has since
been exhausted) and 132 projects under various stages of implementation. Out of these 132
projects, 103 are on schedule and 29 are delayed. In Singareni Collieries Company Limited
(SCCL), out of total 96 mining projects, 54 have been completed and out of the remaining 42
projects, 33 are on schedule and 9 are delayed. The company wise position is as follows:-

The detailed breakup of all delayed projects as on 31.12.2008

Company Total number of Number of Ongoing projects
6
 projects completed projects
Total On schedule Delayed
ECL 67 46 21 16 5
BCCL 70 62 8 5 3
CCL 70 50 20 13 7
NCL 24 15 9 8 1
WCL 108 87 21 18 3
SECL 107 74 33 26 7
MCL 41 21 20 17 3
CIL 487 355 132 103 29
SCCL 96 54 42 33 9

Coal resource of India

Types of coal India BCCL (JCF)

Bt % share Bt % share
Prime Coke 5.31 2.01 5.31 27.35
Medium Coking 26.32 9.95 6.16 31.73
Semi-Coking 17.07 0.65 0 0
Total Coking 33.34 12.61 11.48 59.08
Non-coking 230.25 87.04 7.95 40.92
Tertiary 0.94 0.36 0 0
Total 264.53 100 19.43 100

• in India 12.61% of total reserves is coking coal

• In JCF 59.08% of total reserves is coking coal

• Entire reserves of prime coking coal of India is in Jharia Coal Field

Coal Industry Outlook

7
 Coal is diverse and abundant source of energy. It will play an important role in the future global
energy demand. Known coal reserves are spread over almost 100 countries and at current
production levels proved coal reserves are estimated to last for over 200 years. In contrast,
proved oil and gas reserved are estimated to last for 40 and 60 years respectively at current
production levels. A substantial expansion in domestic coal production will be needed if the
power sector needs to grow as well as to support the targeted 8%-9% GDP growth rate.
According to the MoC estimates coal demand in the year 2024-25 is expected to reach 1,267
MMT against the current demand of 548.38 MMT. This will require investment to the tune of
Rs.1,36,000 crore by 2024-25. Coal currently accounts 43% of railway total freight earnings.

BHARAT COKING COAL LIMITED

MISSION
8
To produce the planned quantity of coal, efficiently and economically, with due regards to safety,
conservation and quality.

VISION

Be the leading energy supplier in the country, through best practices from mine to market.

BCCL produces coking coal for steel plants and non coking coal for the power sector and other
industries, from its open-cast and underground mines. It is only source for prime coking coal in
the country for supply to steel plants; as such it does not have any domestic competitor.
However, since the supply of coking coal by BCCL is significantly less than the demand, coking
coal is imported by steel sector and other industries from outside the country. The company has
214 small coking coal mines in Jharia & Raniganj Coalfields taken over by GOI on 16th Oct;
1971.It was incorporated in January, 1972 under Companies Act. The company became a
subsidiary of Coal India Ltd on 1-11-1975.

As a result of hike in price of coking coal in the international market in the recent past, rendering
the imported coal costlier than domestic coal, there is no perceptible threat to the company of
losing market demand at present as well as in near future.

BCCL coal commands significant premium among non-core sector consumers. In order to
internalize the same, BCCL introduced a transparent and fair mechanism marking coal to such
consumers through e-auction in 2004-05. As a result of first six auction carried out, there was a
significant gain over the notified price of coal.

BCCL is engaged in the process of mining of coal and other allied activities. The major products
are Run of mine coal, washed coal and hard coke. In the process of production of washed coal
and Hard coke, bye products such as Middling, Rejects, Slurry, Tar etc. are generated.

Mines and Processing facilities:

BCCL’s mines are primarily located in the Jharia Coal Field, in the town of Dhanbad, Jharkhand
and a couple of these are located in Ranigunj coal field, West Bengal. Apart from mines, BCCL
also run Coal Washeries, CPP and other bye products hard coke plants. The mines have been
9
grouped into 13 areas for administrative convenience. A snapshot of BCCL’s facilities is given
below:

BCCL-Facilities

Facilities Number
Mines
-UG 54
-OC 32
Washeries
-Coking coal 6
-Non-coking coal 2
CPP (2 x 10MW) 1
Bye product hard coke plants 5

Extraction Process

Coal is extracted or mined by two methods- surface or OC (Open Cast) and UG ( Underground)
or deep mining. The choice of mining depends upon geology of coal deposit. UG mining
currently accounts for about 60% of world coal production.

UG Mines

The entry into UG seams is made by inclines, vertical shafts and or a combination of both. The
coal seams are worked by either of the two basic methods Room-and-pillar and Longwall
mining.

In Room-and-pillar mining, coal deposits are mined by cutting a network of ‘rooms’ into the
coal seam and leaving behind ‘pillars’ of coal to support the roof of the mine. These pillars can
be up to 40% of the total coal in the seam – although this coal can sometimes be recovered at a
later stage. This can be achieved in what is known as ‘retreat mining’, where coal is mined from
the pillars as workers retreat. The roof is then allowed to collapse and the mine is abandoned.

Longwall mining involves the full extraction of coal from a section of the seam or ‘face’ using
mechanical shearers. A longwall face requires careful planning to ensure favourable geology
exists throughout the section before development work begins. The coal ‘face’ can vary in length
from 100-350m. Self advancing, hydraulically-powered supports temporarily hold up the roof
while coal is extracted. When coal has been extracted from the area, the roof is allowed to
collapse. Over 75% of the coal in the deposit can be extracted from panels of coal that can
extend 3km through the coal seam. The main advantage of room–and-pillar mining over
longwall mining is that it allows coal production to start much more quickly, using mobile
machinery that costs under 25 crore (longwall mining machinery can cost 250 crore). The choice
of mining technique is site specific but always based on economic considerations; differences
even within a single mine can lead to both methods being used.
10
Surface Mining also known as opencast or open cut mining – is only economic when the coal
seam is near the surface. This method recovers a higher proportion of the coal deposit than
underground mining as all coal seams are exploited – 90% or more of the coal can be recovered.
Large opencast mines can cover an area of many square kilometers and use very large pieces of
equipment, including: draglines, which remove the overburden; power shovels; large trucks,
which transport overburden and coal; bucket wheel excavators; and conveyors. The overburden
of soil and rock is first broken up by explosives; it is then removed by draglines or by shovel and
truck. Once the coal seam is exposed, it is drilled, fractured and systematically mined in strips.
The coal is then loaded on to large trucks or conveyors for transport to either the coal preparation
plant or direct to where it will be used.

Open Cast (OC) Mining:

OC or surface mining is only economic when the coal seam is near the surface. This method
recovers a higher proportion of the coal deposits than UG mining, as all seams are exploited i.e.
almost 90% of the coal can be recovered. Large OC mining involves HEMM like shovel,
Dumpers, Drills, etc. the overburden of soil and rock is first broken up by explosives, and it is
then removed by shovel and trucks. Once the coal seam is exposed, it is drilled, fractured and
systematically mined in strips. The coal is then loaded on to conveyors belt or trucks and
transported by rail or road to the user location.

Products Of BCCL

BCCL is one of the leading coal producing companies in India with an aim of fulfilling
the national need of energy.

a) Raw Coal:

1) Direct Feed Coking Coal for use in Steel Plant

11
 2) Washery Linked Coal

3) Non-linked Washery Coking coal for other industries

4) Semi Low Volatile Coal for Power plant and other industries

5) Non-coking coal for power houses Fertilizers, Cement Plants, etc.

b) Washed Coal and by-products:

1) Washed Coking coal for steel plants

2) Washed Non-coking coal for power houses

3) Washery Middlings for power plants

4) Washery Slurry and rejects for brick kiln and other industries

c) Hard Coke and by-products

1) Hard coke for defense and other industries

2) Coal tar etc.

Types of coal

Prime Coking coal

It is divided into two categories based upon ash content:

1. Steel 1 grade

2. Steel 2 grade

If the ash percentage is not exceeding 15% coal is known as steel 1 grade and if ash
percentage exceeds 15% but not 18% coal is known as steel grades 2.

Medium Coking Coal

Medium coking coal is divided into four categories:

1. 18%<Washery I<21%

2. 21%<Washery II<24%

3. 24%<Washery III<28%

4. 28%<Washery IV<35%

12
Categories of Non-Coking coal:

Types of NCC are determined by the heat value of coal and not by the ash percentage as
it is not used for metallurgical purposes. NCC is divided into 7 grades based upon their useful
heat value which is measured in terms of calorie/kg.

Grade Useful Heat Value (Cal/Kg)

Grade A Exceeding 6200

Grade B Exceeding 5600 but < 6200

Grade C Exceeding 4940 but < 5600

Grade D Exceeding 4200 but < 4940

Grade E Exceeding 3360 but < 4200

Grade F Exceeding 2400 but < 3360

Grade G Exceeding 1300 but < 2400

By Products:

Apart from these products BCCL is also selling hard coke and it’s by product coal tar and
mainly washery by products.

Coal washing is a process of separation mainly based on difference in specific gravity of

coal and associated impurities like shale, sand and stones etc so that we get relatively
pure marketable coal without changing the physical properties of the coal.

By products of Washery:

Washery by products can be divided into following parts:

Slurry: This is found in different grades depending upon the quality. Hard coke manufacturers
take best slurry and medium grade slurry is taken by slurry beneficiation plant.

Middling: This is used for power sector

Reject: Brick manufacturer use this type of coal.

13
BCCL produces coking coal for steel plants and non-coking coal for ower sector and other
industries from its opencast and underground mines. It is only source of prime coking coal in the
country for supply to steel plants as such it does not have any domestic competitor. However,
since the supply of coking coal by BCCL is significantly less than demand, coking coal is
imported by steel factory and other industries from outside.

Pricing of the product is not an issue for BCCL, because it is still cheaper than imported coal,
there is no impediment of marketing of the produce, as the demand for coal of BCCL is expected
to rise from current 35.4 Million Tonnes during 2007-08 to 44.4 million tonnes in 2011-12 out of
which demand in steel sector shall rise from 59 million tonnes to 60 million tonnes during the
same period.

Manpower:

BCCL has had to support legacy problems related to labour. At the time of nationalization
BCCL’s manpower strength was around 200,000. The same has come down to 80051 in the
current year.

year Manpower

2004-05 92268
2005-06 87146
2006-07 83578
2007-08 80051

Though the stoppage of recruitment has helped to prune down the manpower strength, it has
taken heavy toll on the age profile of the employee. Almost 60% of the non-executive cadre is
above the age of 45 years. This is a real cause of concern especially in the mining industry where
productive activity involves substantial physical effort.

Rationalization and control of manpower during the FY 2007-08 has been one of the major thrust
are in BCCL. During this period there has been an overall reduction of 3527 employees on
account of superannuation, dismissal, resignation, death & medical unfitness etc. There has been
reduction of 3549 employees on account of superannuation and separation due to other reasons
compared to 3647 of employee during the financial year 2006-07.

The comprehensive manpower strength of the company as on 31.03.2007 and 31.3.2008 stands
as under:

Category 31.3.2008 31.3.2007

Executive 2293 2318
Supervisor 7427 7703
Clerical 5445 5836

14
Skilled/Workers 23060 24428
Semi/Unskilled Workers 40583 42022
Sub total 78808 82307
Casual 114 120
Badiis 160 151
Temp. M/Loaders 273 274
Trainees 696 726
Sub total 1243 1271
Grand total 80051 83578
Production

A break up of BCCL’s production of coal over the past five years is shown below

Production (MMT)

Years Production in MMT (actual) Production mix (as

percentage to total)
UG OC TOTAL UG OC TOTAL
07-08 4.64 20.751 25.2 17.7 82.29 100
06-07 4.094 19.301 24.204 20.26 79.74 100
05-06 5.469 17.842 23.311 23.46 76.54 100
04-05 6.376 15.938 22.314 28.57 71.53 100
The production of coking coal and non-coking coal (MMT)

2004-05 2005-06 2006-07 2007-08 CAGR

Coking Coal 4.127 4.232 3.275 3.54 8.09%
Non-coking coal 18.187 19.07 20.93 21.66 3.34%
Total 22.314 23.311 24.204 25.2
The production of coking coal has been declining at a much higher pace than non-coking coal,
also impacting the average sales realization profile of BCCL. Since coking coal price are much
higher than non-coking coal. In the year 2007-08 the sale of coking coal increased marginally as
but below the level of 2005-06. Owing to greater concentration of coking coal in grade mix
resulting into increase in profit for the year 2007-08.

15
Company should focus on greater realization of coking coal which will increase the
profitability.

Loss of Production: (In MMT)

2003-04 2004-05 2005-06 2006-07 2007-08

a) Power Failure 0.67 0.273 0.184 0.27831 0.14
b) Absenteeism 0.252 0.185 0.0514 0.0489 0.055
c) Rain 0.028 0.038 0.0067 0.15 0.383
d) Mechanical breakdown 1.123 0.852 0.5375 0.683 0.701
e) Industrial relations 0.047 0.018 0.0029 0.0059 0.065
f) Lag/Stowing 0.03 0.03 0.0187 0.0924 0.0005
g) NA/Land Lag/Stowing 1.608 1.147 0.2075 0.483 0.915
h) Roof trouble/Others+Fire 1.065 0.414 0.1794 0.593 0.3795
Total 4.823 2.957 1.2011 2.343 2.639
Almost 30% of production loss is due to mechanical breakdown. Also controllable factors such
as power failure and absenteeism contribute 15% to 30% of the production loss annually. In
addition to that land acquisition is one of the biggest contributors for loss of production

Technology:

BCCL has been operating its mines with various levels of mechanization such as manual, semi-
mechanized and mechanized. It the UG segment it is moving towards completely mechanized
mines by adopting PSLW technology and CMs in two new projects. It is expected that such a
move towards higher mechanization will improve productivity and reduce efficiency.

Mining is a process that gains value at higher levels of mechanization. Higher levels of
mechanization help in better efficiency and increased production. However, introduction of such
technologies is not possible in all the mines for various reasons such as geology and smaller size.
The decline in production is clearly related to decrease in the number of equipment and lower
availability of equipment.

HEMM’s 2004-05 2005-06 2006-07 2007-08

Dragline 2 2 2 2
Shovel 172 169 156 157
Dumper 541 609 598 568
Dozer 133 159 130 128
Drill 175 185 142 138
Capacity utilization 61.8 65.8 68.8 72

16
The number of equipment like shovel, dumper, dozer, drill has decreased substantially in the
year 2007-08. Also the availability levels of almost all equipment except dumpers have always
been below CMPDIL norms. The reason for decrease in number of HEMM is because of
increased age of HEMMs on account of reduced level of investment in such equipment.

Distribution of coal to core sector

Core sector of power including CPP, Steel, Cement, Defense, Fertilizers and Railways. Power
and Cement sectors are allocated coal through standing linkage committee (SLC) operating
under MoC. Two types of linkage committees function for deciding the coal linkage to the core
sector consumers:

• SLC(Long Term)

• SLC(Short Term)

SLC (Long Term) considers requirement of consumers at the planning stage and links the
requirement with long term perspective from a rational source after examining the factors like
quality required, time frame, location of the consuming plants, transport logistics, development
plan for coal mines etc.

Distribution of coal to non-core sector

Non-core sector comprises linked industrial consumers, brick manufacturing units and other
seasonal consumers. After the introduction of new coal sales policy in January , 2003 for sale of
coal to non-core consumers, the arrangements of Fuel Supply Agreement (FSA) between the coal
companies and non-core consumers was introduced. Also coal companies can enter into FSA
with Central/State level nominated agencies for distribution of coal to SSI and small consumers.

Pricing Scenario

The price of coal has been fully deregulated after the Colliery Control Order, 2000 was notified
with effect from January 1, 2000 in supersession of the Colliery Control order 1945. Now
Central Government has no power to fix the prices and following the recommendation of Bureau
of Industrial Cost and Prices the Government deregulate the prices of all grades of coking coal
and A,B and C grades of Non-coking coal. The government also allows the CIL and SCCL to fix
prices of C, D and E grades of Non-coking coal once in every 6 months by updating the cost of
indices.

17
 Inter firm relationship

Inter-firm Comparison

CIL has eight subsidiaries which also includes BCCL. Comparing Inter firm details will give
better insight of the company performance.

Coal Production

Company wise Coal Production

Company 2003-04 2004-05 2005-06 2006-07 2007-08

ECL 24.253 31.114 30.47 24.1 28.136
BCCL 22.314 23.311 24.205 25.2 25.51
CCL 37.39 40.513 41.32 44.146 43.236
NCL 49.95 51.518 52.16 59.62 63.65
WCL 41.4 43.204 43.21 43.51 44.7
SECL 78.55 83.2024 88.5 93.79 101.15
MCL 66.080 69.604 80 80.01 96.36
NEC 0.628 1.101 1.05 1.01 1.01
BCCL accounts for 5.87% of total coal production in India. In India about 85% of the
total production is by way of OC mining and the balance by way of UG mining. However, for
BCCL OC mining accounts for 69% of production only. BCCL has been facing land acquisition
and rehabilitation problems due to which its production from OC mines is lower.

Productivity: Output Per Man shift

Company 2003-04 2004-05 2005-06 2006-07 2007-08

ECL 1.07 1.29 1.34 1.07 1.33
BCCL 1.23 1.04 1.15 1.18 1.22
CCL 2.51 2.75 2.81 3.22 3.27
NCL 10.24 10.6 10.94 13.81 14.95
WCL 2.41 2.43 2.5 2.52 2.54
SECL 3.95 4.19 4.53 4.83 15.22
MCL 12.93 13.3 15.81 16.175 16.43
NEC 0.92 1.64 1.7 1.88 1.77
CIL 3.05 3.26 3.54 3.84 4.09

OMS for BCCL is lower than most of its peers, primarily because of its disproportionately high
manpower, higher proportion of UG mines production than most of the other companies and
lower capacity utilization. Comparing the OMS with preceding year it has shown positive growth
of 3.39% as compared to industry average of 6.51%, and the company has to improve
considerably and raise over the industry average for better result.

Capacity utilization:
18
Company 2003-04 2004-05 2005-06 2006-07 2007-08
ECL 86.98 89.3 97.58
BCCL 61.17 56.84 61.46 64.84 61.75
CCL 88.42 82.24 88.83
NCL 95.87 97.6 98.6
WCL 104.66 111.48 113.92
SECL 101.15 107.97 114.3
MCL 112.5 123.28 133.68
NEC 119.67 70.84 100.35
CIL 96.8 99.35 105.44

Capacity utilization of BCCL is the lowest among its peers. Reason for low capacity utilization is
loss of coal production due to underinvestment, lack of replacement of machines, ageing of
employees, etc.

The problem of fire and subsidence together with high population density and unabated growth
of human settlements and townships has made the coalfield one of most difficult and
challenging. Proper exploitation of coal is hampered due to following constraints:

 Difficult geo-mining condition due unpredictable presence of geological disturbance

like faults, dykes, sills, igneous intrusive, pyrolitizations of seams etc apart from wide
variation in seam configuration and geometry, steep gradient etc

 Many seams are highly gassy and susceptible for spontaneous heating

 The Coalfield is densely populated having large township like Jharia, Karkend,
Katras, Bhowra, Patherdih with high population density Presence of large number of
human settlements since decades in coal bearing area preclude mining and also limit the
equipment size of opencast projects.

 The protective measures for dealing with fire and subsidence becomes difficult due to
illegal occupants and their unwillingness to vacate in spite of notices and repeated
requests

 Presence of large number of surface and underground water bodies in developed and
abandoned workings, some of them are affected by fire/subsidence thus endangering
workings belowground and also attract special statutory restrictions on operating mines.
BCCL is pumping out about 20 tones of water for every tonne of coal produced which
adds to the cost of mining by about 160 Crore per annum.

 Presence of large network of road and railway lines, some of which has been
endangered due to fire and subsidence

 Presence of 67 number of fires with potential to expand in areas and numbers

19
  Presence of surface features like railway lines, river/jores, townships along with
waterlogged upper horizons and fire necessitate sand stowing making the cost of mining
prohibitive.

 Unscientific mining process and unstowed workings in the past have resulted in
serious problem of subsidence endangering safety of railway lines, roads, jores and
buildings.

 Large scale mechanization in virgin seams is not possible due to overlying developed
seams which are either waterlogged/ collapsed/ fire

Overall cost of production:

(Fig in Rupees)

Company 2003-04 2004-05 2005-06 2006-07 2007-08

ECL 1220 1069.65 1172.18
BCCL 1161 1123.26 1113.1
CCL 638 616.55 615.41
NCL 492 508.07 546.33
WCL 701.58 734.85 820.34
SECL 483.07 526.06 523.22
MCL 226.37 224.38 231.49
NEC 2857.06 1859.92 2035.14
CIL 589.77 592.04 614.88 661.35
BCCL has the 3rd highest cost of production of coal in India. Manpower costs which account for
about 2/3rd of the cost of production are relatively very high. The higher proportion of UG
mining in the case of ECL, BCCL& NCL increased the cost of production.

Result of CIL (subsidiaries FY 2008-09)

(Rs. crore)
PBT Gross Net Sales Share Net Worth Staff
Sales Capital Strength
ECL (-)1026.66 4057.66 3187 2218.45 (-) 4239.86
BCCL 97.05 3385.95 2954 2118 (-) 4816.61 80051
CCL 1035.25 5060.54 4362 940 1886.17
NCL 2763.75 6388.78 5455.21 177.67 6076.46
WCL 930.22 5681.34 4909.18 297.1 3435.24
SECL 2067.37 8728.04 7181.59 359.7 4459.52
MCL 2504.79 5291.07 4347.08 186.4 4686.72
CMPDIL 5.00 272.32 235.46 19.04 63.87
CIL/NEC 2642.58
Total 11019.35
Less: Dividend 2378.27
Overall CIL 8738.47
20
 Out of the seven coals producing subsidiaries one is making loss while the others have made
profits during 2008-09.

REASON FOR SICKNESS

Performance Chronology Before Revival Plan

Year Manpower Production (Mt) Loss (Rs Cr)

1973-74 187132 16.34 -10.60

1986-87 173589 24.01 -216.68
1996-97 147439 27.14 -322.81
1997-98 142436 30.92 -140.91
1998-99 135535 27.17 -442.34
1999-00 127220 27.90 -692.32
2000-01 119978 25.97 -1276.70
2001-02 113738 25.25 -755.00
2002-03 108043 24.15 -507.13
2003-04 102414 22.68 -569.85
2004-05 97110 22.31 -959.43
REASONS FOR LOSS / SICKNESS

1. Legacy from the takeover:-

 Huge manpower: -
When all take over completed, BCCL inherited a huge manpower which was very much
disproportionate to that of production because the manpower with the company was
much higher than required for the production. This resulted in increment of cost of
production but the revenues were the sales. Thus company started incurring losses since
the inception.

 Non-productive units: -
Many Non-productive units were added to the Company during the take over. This
gradually started burdening the Company economically, especially on account of
surplus, under employed manpower and huge maintenance cost. This acted as a fuel to
the fire of losses.

2. Difficult mining condition:-

21
A. UNDERGROUND
 Low evacuation capacities - shaft mining: -
Shaft mining is a kind of underground mining in which a deep mine is made to extract
the coal. Since the mine is very deep so evacuating the coal is very difficult as the
mine in very deep. The company does not have modern mechanization so evacuating
capacities and not 100%. Therefore, because of low capacities incurring machinery
results in more cost and the production is comparatively less. This results in increase
infixed cost and in turn the company faces losses.

 Low mechanization - poor O.M.S.:-

At the time of nationalization the company acquired huge manpower. But due to poor
mechanization the production of the company was very less as compared to the
manpower. Hence, output per manshift (O.M.S) is low. Due to low O.M.S the
production is less than the manpower required for the production to be done.
Therefore, the company had to pay more wages and salaries to the workers and the
cost kept on increasing it added to losses.

 Costly sand stowing operations @Rs.300/Te:-

Whenever a mine is made it is very much necessary for company to fill the vacant
portion with sand or any other thing. If this is not done so then the land may subside.
If in the land there is a connecting road or rehabilitation or any public property it
cannot be left to subside. At this position sand stowing comes into action and this
method is very costly as costs Rs.300 per tonne. This method does not add to
production but rather increases cost of the production which the company can not
bear.

 High pumping cost (25 T water/T of coal):-

When a mime is made there are a number of ways by which water can enter into the
mine, like boring, rain, holes and sometimes there is underground water which comes
out during mining. It stops the production; therefore, pumping out of water is very
necessary to carry out the production further. But the cost of pumping out is a costly
affair and adds to the cost of production, therefore, again it adds to the losses.

 Fires, unstable workings & surface constraints:-

When coal is excavated in the mine it is kept there for sometime to transport. Since
coal is made of carbon it suffers from spontaneous heating and catches fire and gets
destroyed. There are also other ways of fire. There were about 72-73 fire at the time
of nationalization. The company could control only 5-6 fire as it is difficult to
control. Thus it reduces the production but not the cost.

Inside the mine it is very difficult to work due to various reasons like hot
temperature, darkness, moving inside the mine etc. due to these reasons the workers

22
 face a lot of problems in doing their work which results in dissatisfaction of work,
low O.M.S and increment in cost.

Sometimes the company faces the problem of selective mining to avoid

displacement of rehabilitation, destruction of public property and so on. These
problems are called surface constraints. Because of all these problems the company
has to leave the coal there, like in the case of Jharia mines. These problems reduce
the production and the revenues are not enhanced resulting in more losses.

B. OPENCAST
 Dense population impedes acquisition of land:-
In case of opencast mining the mine is not very deep i.e. the coal is found nearer to
the surface, so in this situation the earth over is taken out and then the coal is
excavated. This requires a huge area on the surface. But in the area of dense
population the acquisition of land becomes difficult as the company is unable to pay
any compensation for displacement. There some government laws also acting to
protect public areas. Due to these constraints the company cannot increase the
production easily, thus can’t earn revenue.

 Restricts operations to smaller patches with low capacity HEMM:-

Dense population makes the company work in small opencast mines.
The company has to use heavy electrical mining machinery and the cost of these is
very high. But the machinery required doing a particular task, works lower than its
actual capacity. The working ay lower capacity leads to low productivity of
equipment and high cost of mining.

 Requires large rehandling of OB due to non-availability of non-coal bearing land:-

It is generally found that there non coal bearing land near by the mine. These areas
generally have rehabilitation or any road etc. In this case there is huge rehandling of
over burden (OB). This is so because if there is a non coal rearing land near by then
the over burden is first kept to a near the mine just after the evacuation then it is
transferred to the coal yard or to other place. In situation like this huge dumpers
have to be used to keep the coal after crossing the non coal bearing area. This in
return increases the cost due to heavy machinery use and rehandling.

3. Non-availability of Land

Physical possession of acquired land has remained a cause of concern for the company. The
production of the company faces constraints due to dense population in the Jharia coal fields.
The matter has repeatedly been pursued with MOC (ministry of coal) and state government. A
few examples of such cases are:-

 Diversion of Dumra-Tundu road:-

23
 About 46 lakh tones of prime coal beneath this road is blocked and under threat of getting
destroyed due to fire. The road is unsafe due to advancing fire. Immediate action is
required for transfer of this road to BCCL.

 Physical possession of acquired land in Kenduadih:-

Physical possession of acquired land in subsidence prone areas of Kenduadih held up due
to non vacation 5000 families and encroachers residing in this area even after order of
Supreme Court due to law and order problem.

Above are the examples which depicts that the coal is either not excavated or may get destroyed
due to fire. Thus these problems are reducing the production indirectly and in return the revenues
are decreased.

4. Hike in salary & wages incommensurate to paying capacity:-

In BCCL there has been constantly pay revisions done which led to the increment of salaries
wages. Following are the revision made—

 Till 1995-96 CPRA enabled meeting pay revisions.

 CPRA was withdrawn w.e.f 1996-97
 NCWA-VI signed in Dec 2000 with BCCL in BIFR suffering cash losses.
 NCWA-VII signed in 04-05 w.e.f. 1st July 2001
 NCWA-VIII is finalized on 24.01.09 and is to be implemented soon.
But all these revision were adding to the cost of production only as the production did not
increase because of low O.M.S. thus it was out of company’s capacity to pay more but had to
pay because of government laws and to preserve industrial harmony. It was almost not
implementable on a standalone basis.

5. Impact of Loss: - Foregoing Replacement of Worn Out

Equipment:-

Every company needs to do capital expenditure. BCCL engaged in excavation of coal so it needs
huge machinery thus requires heavy capital investment. But company was in such bad position
that it could not even pay for depreciation. So the funds could not accumulate fund for further
investment which led to use of old and worn out machinery. Due to under investment in new
machineries over the last five to six years, the age profile and productivity of machinery have
turned adverse, affecting production but the cost of production remains the same. Following are
the rates of depreciation dropping--

 Capital Outlay was more than 100% of Annual Depreciation till 1998-99
 Dropped to 55% in 1999-00
 Further dropped to 35 to 37% during 00-01 to 02-03
 Led to ageing of machines beyond rated life
24
 6. Problem of Working Capital

The shortage of Working Capital was rendering the Company incapable of paying for
procurement of critical items of stores & spares which was affecting adversely the production
and safety. Fund crunch leading to staggering payment of Salary & wages and backlog of
welfare amenities ultimately resulting in disenchantment and despair among the workers. Delay
in payment to various input providers i.e., suppliers and contractors, which degraded the brand
value of the company and resulted in shortage of suppliers and contractors. There is backlog in
the payment of statutory.

7. Financial Burden Faced by BCCL

IMPACT OF PAY REVISION

• The NCWA-VIII is finalized. An estimate for the impact of NCWA-VIII has been
prepared. Further, an estimate has been prepared regarding impact of Salaries of
Executives. Total impact will be around Rs. 960.71 Cr. which is to be provided in 08-09
& which will result in a loss of Rs. 902 Cr. in 08-09.

Statement showing the estimated impact on account of revision of Pay Scale

Amount in crores

Sl no. Particulars Executive Wage board Total

(01.01.2007 – (01.01.2008 –
31.03.2009) 31.03.2009)
1 Overall estimate 71.88 1223.19 1295.07
2 Already provided in 07-08 35.54 298.82 334.36
3 Balance (1-2)
a) Arrear upto 07-08
(PPA) 36.34 425.36 461.7
b) Current year 499.01 499.01
c) Subtotal (To be
provided during
2008-09) (a+b) 36.34 924.37 960.71

• The huge impact of the Pay revision as stated above is bound to disrupt the revival
process of the Company since BCCL is not in a position to absorb this additional burden.
The Company has been expressing this view consecutively during each and every wage
negotiation.

REVIVAL PLAN
1. Strategic Initiative — 1 — Replacement of worn out equipment / HEMM

25
 The company was continuously suffering from aging of machinery beyond the rated life due
to shortage of cash. BCCL should emphasize in acquiring more new HEMMs like shovels,
dumpers etc. Worn out of the machines resulting into frequent breakdown and
underutilization of capacity consequently lower production. By acknowledging these
problems the company decided to replace these old machines by adding new ones which will
benefit the company on three fronts

 Firstly, since, the new machines would work in full capacity, so the number of
machines required was less in number.
 Secondly, since, the new machinery work in full capacity the production would
increase.
 Less maintenance cost which has to be incurred on frequent breakdown of old
machinery
The major benefit was that the cost reduced and the production also increased which helped
the company to earn more revenue. This is one helping hand in bringing the company in
profit in 2005-06. Following are some of the HEMMs requirement of the company:-

HEMM Actual Actual Proj Actual Proj Proj Proj

06-07 07-08 08-09 (till Dec’08) 09-10 10- 11-
11 12
Shovels 22 4 25 15 11 11 11
Dumpers 36 4 91 32 104 24 24
Dozers 11 - 16 1 11 11 10
Drills 6 7 7 - 12 23 23
Value (Rs. Cr) 142.68 41.20 155.00 45.72 143 118 118

In the above table we can see that as the replacement is done the number of HEMMs reduced
so as the cost. Here we can also see that the cost of the projected years is also reducing.

2. Strategic Initiative — 2 — Deployment of H/HEMM in patches

The second initiative which the company took was the deployment of HEMMs. Now the
company identified the HEMMs which were not working in full capacity. These low capacity
machineries were transferred to the smaller opencast mines where they can perform well.
Company also started hiring of HEMMs to smaller patches to reduce capital expenditure of
purchasing the same. This hiring resulted in higher production without increasing the cost.
Thus it added to profitability.

 New-Akashkinaree Project

26
 o Property consists of New Akashkinaree and Govindpur colliery under Govindpur
area.
o Mineable reserve 34 MT
o Proposed to open up a patch of 1 MT initially with H/HEMM
o Subsequently to be converted to a 2 MTY project.
o A unit of the patch with reserve 4 MT which is free from all hindrances has been
started and 0.51 MT coal has been produced in 2007-08 and 0.67 MT till Dec’08.

 Phularitand – Proposal for Mandra Village

o Phularitand OC of Barora area stopped near Mandra village. Reserves 80 Mill.
tonne
o Villagers demanded large scale employment
o Steps to re-start the mine by hired HEMM through a demonstration project taken up
o Did not materialize due to high rates quoted by tenderers in last 2 tenders.
o Recasting of estimate is under process for extraction of coal within the land under
BCCL’s possession with an estimated reserve of 1.5 Mill te.
o Expected to start production 2009-10.

 Kumari Jore Project

o Kumari Jore flowing through Ramkanali, Keshalpur mine of Katras area.

o Being diverted to release reserve of 22 MT
o Proposed to open up a patch having 0.80 MT initially with H/HEMM
o To be converted to a 2 MTY project later
o The project could not be started due to severe land acquisition problem
Contribution from hired HEMM patches:-

In this table we can see the production increased in the small opencast mines by hiring of
HEMMs. The increment of production helped the company to earn more revenues.

Year Actual Actual Actual Actual Actual Actual

03-04 04-05 05-06 06-07 07-08 08-09
No. of running 4 15 16 22 16 13
patches
Actual prodn. 0.17 1.06 2.38 3.13 5.09 3.41(up to
Mt Dec’ 08)
3. Strategic Initiative — 3 — Implementation of Quick Yielding OC Projects

The third initiative which was taken was to identify the quick yielding opencast projects and
to invest in the ongoing projects. It is sometimes seen that the coal is very near to the surface.
BCCL tried to found out such projects and work on it. This will not only reduce the cost of
mining but also increase the production also. Here an interesting thing is that the cost of
production in this case reduces a lot which is a great support of the company. It helps in
27
 earning more revenues at lesser cost. It also helped in the proper utilization of manpower and
implementation of H/HEMM which in turn reduced the burden of payment of wages and
salaries on the company. Following are the few examples:-

 Six projects identified (Capcity-5.02 MTY)

 Shatabdi, Dahibari, Basantimata and Kuiya (Goluckdih) non coking projects have
already been implemented producing 3.08 MT in 07-08. In 08-09 the target is 2.9
MT. The actual up to Dec.’ 08 is 2.01 MT.
 Land problem of Vishwakarma OC has been resolved with employment of 37
heads of land losers initially. The work has already been started for extraction of coal.
 Production from Damoda BJ section OC is delayed due to land acquisition
problem. Matter is under discussion with the villagers and is yet to be resolved.
 Chaptoria OC is planned within the workable area of Kalyaneshwari block. In
262nd Board meeting of BCCL recommended the proposal to CIL for further action
w.r.t transfer of block to WBPDCL.
 Phularitand OC mines where total reserves of 80MMT includes 20% of coking
coal should be opened again which will yield about 5MPTA of coal.

In addition of increased investment in mines and HEMM, concerted effort have to made to
accomplish the projected production level for sustain profitability. The table below shows the
actual as well as projected production of coal from OC mining. H/HEMM in patches and in large
OC mining deployed which will increase the coal production from current 20.751MMT for the
current year to 24MMT for 2011-2012.

Year 2006- 2007- 2008-09 2009-2010 2010-2011 2011-2012

07 08 (Pro) (Pro) (Pro) (Pro)
Mine Cap (Mcum) 65.12 64.7 70 75 75 75
Avg Cap 64.2 68 72 75 75 75
Cap utilisation (%) 68.8 71 72.2 73.3 74.3 76.3
Comp Production 44.65 48.2 51.95 54.95 55.7 57.2
(Mcum)
S/R 2.22 2.39 2.43 2.46 2.46 2.46
Coal Production 16.17 15.661 17.5 18 18.5 19
OB(Mcum) 35.85 39.45 42.5 45.15 45.55 46.7
H/HEMM Patch (MMT) 3.13 5.09 3.4 1.8 .8
Total 19.3 20.751 22 23 23.5 24
4. Strategic Initiative — 4 — Closure of 24 loss making UG mines & Manpower
rationalization
As against the proposed closure of 41 loss making mines earlier, the modified proposal
envisages closure of 24 loss making underground mines during the period spread over 06-07
to 11-12. This decision was taken to reduce the cost and also the losses of the company. The
closure of the 24 mines is being spread over the projected years because it can’t be done at a
single moment. If done so then there will huge underutilization of manpower as the closure

28
 of mines will let them idle but costing the company. Since it is a government organization, so
it cannot retrench employees. So to keep the manpower balanced it is done slowly. This can
be achieved by replacing of personnel against retiring ones. Below is the list of the closure of
the mines:-

Sl Name of the mine Year of Closure Remarks

No
1 East Bassuriya 2008-09 - Once the production
2 Gondudih Mining operation commences from the
already suspended proposed long drifts
3 Maheshpur 2009-10 - these heavily losing
4 Begunia - UG mines will be
5 Gopalichak - automatically closed.
6 KB 5/6 Pit (HMP) Mining operation
already suspended
7 Burragarh -
8 Sudamdih (Shaft) -
9 Basseriya 2010-11 -
10 Bararee -
11 Amlabad -
12 Bhowra (North) -
13 Phularitand -
14 Patherdih 2011-12 - Seven mines have
15 Loyabad - already been closed
16 Bagdigi - due to safety &
17 Katras Choitudih - techno-economic
reasons till 2007-08

However the impact of closure of 41 UG mines will result into sales mix, in terms of high
proportion of coking coal production. Firstly company plans to close mines which were
incurring loss for more than 1000 Rs/tonnes. This will result into closure of mines but
payment to be paid to the employee without contributing the production so the company
plans to close only those mines which is incurring huge loss.

As mentioned earlier that due to closure of mines the burden of manpower is going to
increase for the company. To solve this, the company reducing recruitment of more
employees and tried to replace the employees of closed mines into the new project of small
opencast mines as mentioned in earlier strategic steps. In this table one can see that in near
future the manpower of the company is reducing.

Particulars 05-06 06-07 07-08 08-09 09-10 10-11 11-12

Actual Actual Actual Actual Proj. Proj. Proj.

29
 Op. Manpower 92268 87146 83578 80051 76565 72469 67951

Reduction ( - )

Retirement + 4004 3611 3791 4364 4396 4818 4065

other means

VRS 1118 51 - - - - -

Total 5122 3662 3791 4364 4396 4818 4065

Intake( + ) - 94 264 878 300 300 300
Closing Manpower 87146 83578 80051 76565 72469 67951 64186

Thus by analyzing the above tables we can infer that the manpower will reduce and also the
losses making mines are will be closed. This will reduce the cost of the company a lot as
there will be less payment of salaries and wages. It will also help to reduce the losses of the
company by closing of the mines. The closure of the loss making mines will reduce the fixed
cost of the company as the cost of HEMMs will be less.

5. Strategic Initiative — 5 — Modernization of UG Mines and Washeries

Since the inception of the company the company was earning losses. The company was using
old machinery which is now out dated. The working condition of the under ground mines
was very poor. This gave rise to dissatisfaction of the employees and they turned
unproductive which gave a low O.M.S. this added to the burden of cost for the company. Due
to the use of this machinery the production was not up to the mark and cost was the same
rather more in some mines. Analyzing the problem company decided to improve the working
condition of workers by bringing modern machinery and more safety and comfortable
working for the employees. This generated the satisfaction of job and high O.M.S. which
increased the production at lower cost. It helped in increment of revenues which helped in
bringing profits. Following is an example:-

PSLW Package for Moonidih

 Procurement of Longwall equipment for XVI T seam of Moonidih has been

finalized through global tender and LOA has been issued in favour of M/s
Zhenzghou Coal Mining Machinery Co. Ltd of China.
 Agreement with the firm has been signed on 2nd Dec’08. Implementation within
18 months period with a guaranteed production of 3.50 mt over a period of 5
years which will absorb existing loss of Rs70 Cr per year.
6. Strategic Initiative — 6 — E-Auction

30
 E-auction is the most recent and modern step taken by the company. E-auction is basically
selling coal through the internet. This gave the company a global exposure and a more
standard market. In e-auction the company could sell the coal at higher prices than expected
because of auction. This gave more revenues to the company for the same amount of
production. If we opt for viral marketing we can reduce the cost easily. Thus there were more
revenues at lesser marketing cost which proved profitable. The following table shows the
gain over the notified prices i.e. BCCL could sell coal at higher prices than it could sell in
domestic market.

Item 05-06* 06-07# 07-08 ** 08-09***

(Upto Dec)
Qty sold/Lifted (LT) 28.55 22.79 22.97 24.06
Addl Gain over 183.00 99.2 92.6 95.61
notified price (Rs Cr)

* During 05-06 and during Apr’06 - Nov’06 of 06-07, coal under e-marketing was offered to
non-core sector consumers without any ceiling of the bidding price.

# Pursuant to ruling from Honorable Supreme Court, e-booking was stopped

from Dec’06. During the period Jan’07- Sep’07, e-booking under which ceiling was fixed as
follows:

Non core non-linked consumers - notified price + 30%

** The bidding could not be held during Oct’07 (07-08) due to introduction of

New Coal Distribution Policy. Spot e-Auction Scheme, 2007 was

introduced by CIL from Nov’07.

*** From the month of Sept, 08 the floor price for E-auction has been reduced to the level of
notified price.

GHV:

Gross Heat Value at constant volume is the quantity of heat liberated by combusting the fuel
at constant volume in oxygen saturated with water vapour, the originally material and the
31
final products of combustion being at reference temperature at 250C and the water obtained
from fuel being the liquid state.

The main benefit of measuring GHV is,

PROJECT TITLE:-

STUDY OF DIFFERENT TYPES OF COAL PRODUCTS OF BCCL (BLOCK II AREA) AND

SUGGESTION FOR THE UTILIZATION OF LOW GRADE COAL PRODUCTS.

32
UNDER THE GUIDANCE OF:- M.H QURAISHI. (MINE MANAGER BLOCK II AREA BCCL)

By:-

Chandan Kumar Singh

Adm no:- 9823

Xth Sem

ME and MBA

Product & Services of BCCL

33
COKING COAL
These coals, when heated in the absence of air, form coherent beads, free from
volatiles, with strong and porous mass, called coke. These have coking
properties Mainly used in steel making and metallurgical industries Also used
for hard coke manufacturing

SEMI COKING COAL

These coals, when heated in the absence of air, form coherent beads not strong
enough to be directly fed into the blast furnace. Such coals are blended with
coking coal in adequate proportion to make coke. These have comparatively less
coking properties than coking coal
Mainly used as blend-able coal in steel making, merchant coke manufacturing
and other metallurgical industries

NON-COKING COAL
These are coals without coking properties. Mainly used as thermal grade coal for
power generation Also used for cement, fertilizer, glass, ceramic, paper,
chemical and brick manufacturing, and for other heating purposes

HARD COAL
Hard coke is formed from coking / semi-coking coal through the process of
carbonisation. Mainly used in metallurgical industries Also used in industrial
plants utilising furnaces

WASHED AND BENEFICIATED COAL

These coals have undergone the process of coal washing or coal beneficiation,
resulting in value addition of coal due to reduction in ash percentage. Used in
manufacturing of hard coke for steel making Beneficiated and washed non-
coking coal is used mainly for power generation Beneficiated non-coking coal is
used by cement, sponge iron and other industrial plants

MIDDLINGS
Middlings are by-products of the three stage coal washing / beneficiation process,
as a fraction of feed raw coal. Used for power generation Also used by domestic
fuel plants, brick manufacturing units, cement plants, industrial plants, etc.

REJECTS
Rejects are the products of coal beneficiation process after separation of cleans
and / or middlings, as a fraction of feed raw coal. Used for Fluidized Bed
Combustion (FBC) Boilers for power generation, road repairs, briquette
(domestic fuel) making, land filling, etc.

CIL COKE / LTC COKE

CIL Coke / LTC Coke is a smokeless, environment friendly product of the
Dankuni Coal Complex, obtained through low temperature carbonisation. Used
in furnaces and kilns of industrial units Also used as domestic fuel by halwais,
hotels, etc.
34
COAL FINES / COKE FINES :
These are the screened fractions of feed raw coal and LTC coke / CIL Coke
respectively, obtained from the Dankuni Coal Complex and other coke oven
plants. Used in industrial furnaces as well as for domestic purposes
 TAR / HEAVY OIL / LIGHT OIL / SOFT PITCH :
These are products from Dankuni Coal Complex using low temperature
carbonisation of non-coking coal in vertical retorts. Used in furnaces and boilers
of industrial plants as well as power houses, oil, dye, pharmaceutical industries,
etc.

UITABILITY OF COAL
E. HARD COKE
Industry Type of Coal Required
Coking and semi-coking coal, direct feed and
Steel making washed; blendable coal; low ash % Assam and
Ranigunj coal
Non-coking coal of high Initial Deformation
Steel making, sponge iron industry
Temperature (IDT) (>1200 degrees Celcius)
Cokeries / coke oven plants Coking and semi-coking coal
Briquette making / domestic fuel Semi-coking and non-coking coal; middling &
making rejects of washeries
Special Smokeless Fuel (SSF) Semi-coking coal of Coking Index 8 – 10
Non-coking coal; middlings of coking coal
Power sector washeries; washed coal of non-coking coal
washeries
Non-coking coal; middlings of coking coal
Cement sector
washeries
Glass and potteries Long Flame non-coking coal
Cast iron castings Hard coke
Steel castings Non-coking coal
Non-coking coal; middlings of coking coal
Bricks
washeries
Old boilers Superior grades of non-coking coal
Halwais, domestic use, hotels, etc. Non-coking coal; CIL Coke / LTC Coke

GRADATION OF COAl

A. COKING COAL
Grade Parameter
Steel – I Ash not exceeding 15%
Steel – II Ash exceeding 15% but not exceeding 18 %
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 Washery – I Ash exceeding 18% but not exceeding 21 %
Washery – II Ash exceeding 21% but not exceeding 24 %
Washery – III Ash exceeding 24% but not exceeding 28 %
Washery – IV Ash exceeding 28% but not exceeding 35 %
B. SEMI COKING COAL
Grade Parameter
Semi Coking – I Ash + moisture not exceeding 19 %
Ash + moisture exceeding 19 % but not
Semi Coking – II
exceeding 24 %
C. NON-COKING COAL
Grade UHV RANGE (KCALS/KG)
A Exceeding 6200
B Exceeding 5600 but not exceeding 6200
C Exceeding 4940 but not exceeding 5600
D Exceeding 4200 but not exceeding 4940
E Exceeding 3360 but not exceeding 4200
F Exceeding 2400 but not exceeding 3360
G Exceeding 1300 but not exceeding 2400
D. HARD COKE
Grade Ash %
By Product Premium Not exceeding 25 %
By Product Ordinary Exceeding 25 % but not exceeding 30 %
Beehive Premium Not exceeding 27 %
Beehive Superior Exceeding 27 % but not exceeding 31 %
Beehive Ordinary Exceeding 31 % but not exceeding 36 %

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37
 PROBLEM EXISTING AT BLOCK II AREA:-

STUDY OF DIFFERENT TYPES OF COAL PRODUCTS OF BCCL (BLOCK II

AREA) AND SUGGESTION FOR THE UTILIZATION OF LOW GRADE COAL
PRODUCTS.

Introduction:
Coal Industry was nationalized in two phases, coking coal in 1972 and noncoking coal in 1973.
In pre-nationalization period, four washeries belonged to private sector companies who were
both producers and users. Rest of the washeries belonged to public sector companies. Except
NCDC (National Coal Development Corporation) who washed coal for the consumers, HSL had
washeries washing coal for their own use. All these washeries were beneficiating coking coal for
use in steel plants except one at Nawrozabad belonging to ACC and another at Giddi belonging
to NCDC which washed non-coking coal.

At the time of nationalization (1972) India was producing about 78 million tonnes of coal of
which about 17 million tonnes were produced per annum from open cast mines. The washery
feed was entirely from underground mines with the result that washery yield of clean coal was
about 70%. Today the quality of feed to washery has deteriorated due to 80% of production from
open cast mines with the result that yield in coking coal washeries has come down to
40-45%.

Initiatives :
Coal India Ltd. was formed in 1975. One of its objective was to add value to the mined coal for
supplying clean and sized coal to the customers by adopting appropriate coal beneficiation route.
This led to construction of coal beneficiation plants for non-coking coal. The washeries
belonging to NCDC and HSL were transferred to CIL. In late 90’s there was a policy directive
from Govt. of India that all coal meant for consumers beyond 500 km distance and transported
by Indian Railway system must be beneficiated to optimize carrying capacity of the Railways
and save energy. This directive did not enthuse the producer, in this case CIL, to construct
washeries to handle its entire coal production owing to the fact that power utilities were
unwilling to pay the additional cost of washing coal. Besides, the Indian Railway is happy to
carry any coal, as it is their major source of revenue (approx. 40%).
The initiative to wash coal has been dampened due to rocketing crude price leading to
substantive increase in the price of coal in International market. In 1998 the crude price was $ 10
to $ 12 per barrel and the steam coal price in the spot market was $ 26 C.I.F. CIL had to compete
with International coal market as import of non-coking coal was permitted in 1993. 1998 was the
first year in which CIL had to slash its production target by 6 million tonnes in the middle of
financial year due to loss of coastal market to imported coal. Had the energy prices continued at
this level, the producer might have been forced to undertake construction of more washeries for
non-coking coal. This was not to be so, as the crude prices started climbing and is poised to
break $ 80 barrier. The reasons for increasing price of energy resources are many, including Mr.
Laden fixing the fair price of crude at $ 100. The International coal price of noncoking coal
ranges between $ 60-80 and that of coking coal between $ 120- 160. Till 1998 import of coal

38
was perceived as a threat, now it is an opportunity for the producers of coal in this country,
specially when KYOTO did not impose restriction of use of coal on India, China and South
Korea with U.S. not rectifying KYOTO Protocol.
Economics of coal marketing is in favour of selling run of mine coal, as margin on sale of ROM
is much higher compared to margin on washed coal; as it is in the case of crude vis-à-vis refined
products. What I am trying to stress is that in sellers market producers are not enthused to wash
coal. With the creation of Asia-Pacific Partnership on Clean Development and climate, however,
the member countries feel need for coal beneficiation as 3 integral part of carbon abatement
initiative. This workshop is the outcome of this initiative.

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RECOMMENDATIONS:-

Policies:-
I am in no position to delineate on the policies to be formulated and implemented, as these are
prerogatives of the governments of the member countries.
Practices :-
Starting with chance sand flotation cone used at West Bokaro and Jamadoba washeries of
TISCO, Indian washeries have used more sophisticated schemes of washing coal (coking coal).
CFRI has classified the technology used in three groups.
Group A : -
Run of mine coal crushed to 75 mm is directly screened (25 or 13 mm size) and separate washing
systems are incorporated for the coarse and small size coals. The coarser fractions are treated in
HM baths and the under sizes are washed in Baum or Feldspar Jig or in HM cyclone.
Group B : The washing system is same as above, except that a pre-washer (Baum Jig) is
incorporated to eliminate stone bands and deliver a more consistent feed.
Group C : This scheme is suited for upgrading inferior coal envisaging the use of HM cyclone
washer for treating the entire quantity after crushing it to some convenient size (20, 13 or 6 mm)
and separating the slurry below 0.5 mm by wet screen. The upgrading of slurry is done either in
hydro-cyclones or in flotation cells. In non-coking coal washeries the beneficiation is done after
crushing of ROM to 100 mm and passing it through Batac Jig.
Washability of Indian Coal :
At this juncture I would like to point to the participants that Indian coals are difficult to wash due
to presence of fixed dirt consisting of inherent mineral matter of coal resulting from the residual
inorganic constituents of the coal forming plants. CFRI developed a system to determine
washability characteristics of coal in terms of a index represented by a number ranging between
0 to 100. It was called washability index which was independent of total ash in coal. When index
is low, the coal is difficult to wash. They have evaluated the washability indices of Indian and
foreign coals. Indian coals belonging to Permo-Carboniferrous period have indices between 15-
43, whereas the Tertiary coal indices range between 47-76. The indices for British, German and
American coal range between 45-76, while those from Japan, Australia, South Africa have
indices between 20-49.

CFRI proposed following nomenclature to define cleaning possibilities of Indian coals.

Washability characteristics Range of washability Indices

Washability Characteristics Range of Washability Index

Easy >40
Medium 40-20
Difficult <20

They also suggested the use of yield reduction factor. It is defined as a percentage reduction in
yield for each one per cent reduction in ash content at any selected ash level of the clean coal.
I do not intend to deal with the entire spectrum of the fundamental studies they have carried out
in Indian coals regarding their washability.

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Use of Coal Reject :
CIL is utilizing some of the rejects for captive power generation through normal route and
through fluidized bed combustion route (7.5 MW Fluidized Bed Plant is at Rajrappa Washery).
Major users are brick manufacturers.

REFERENCES:-

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• REVIEW OF TECHNOLOGY REQUIREMENTS OF THE COAL PREPARATION SECTOR IN
INDIA: Dpt of Trade and commerce
• ANNUAL REPORT GOVERNMENT OF INDIA MINISTRY OF COAL (http://www.coal.nic.in)
• http://www.dgms.in
• http://www.bccl.cmpdi.co.in
• http://www.coalindia.in
• Annual report BCCL

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