Indian Coal Grapples With Renewable Energy Surge

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It’s the largest coal miner in the world, and accounts for at least 80% of India’s coal production.

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Now, faced with India’s onward march on the path of renewable energy, Coal India Ltd (CIL) finds itself stuttering. So much so that it has decided to shutter as many as 37 coal mines by March of next year.

India’s Coal Ministry, in a review meeting with CIL and its subsidiaries, took special note of the fact that a substantial number of mines had not been able to recover costs in the form of even salaries paid to the workers. It then directed CIL’s arms to conduct a detailed study of such mines and report on action taken.

CIL also explained away the decision, saying its subsidiaries undertake an annual exercise to determine profit- and loss-making mines for comparative study of performance. The decision has been met, predictably, with protests from local labor unions. If and when the mines are shuttered, it would help the company save about $124 million. The mines make up about 9% of the total number of mines operated by CIL.

CIL is not alone in facing the challenge represented by the growing renewable energy sector.

One estimate by the Energy and Resources Institute predicts if the cost of renewable energy and storage continue to fall, India may phase out coal power completely by 2050. Both solar and wind energy prices have been steadily decreasing over the last three years.

In 2016-17, India added over 14,000 megawatts of new renewable energy power compared to almost 7,000 megawatts of new coal power capacity.

But green energy is not the only new challenge coal mines face.

A report, titled “How can India unleash its potential to become a world mining superpower,” has said lack of transparency and a difficult bureaucracy were creating obstacles in the growth of India’s mining industry.

The observations were part of the 2017 Global Mining Industry Summary Report prepared by Innovation State of Play, a survey and analysis platform founded by VCI in partnership with The University of Western Australia, conducted between August 2016 and March 2017.

The report surveyed views from over 50 leaders from India’s top nine mining firms, including Adani Group, CIL, Jindal Steel, Power Limited, Tata Steel Limited and Wipro Limited.

The report noted environmental pressures still weigh on minds of Indian miners more than their global peers, but 93% of Indian mining leaders believe that innovation is critical for long-term business strategy and success, compared with 62% in Australia and 59% in the U.S.

Some of the Indian CEOs who were interviewed for the report opined that influencing government to alter policy settings, establishing industry collaboration platforms and government plans to usher in transparent private investment could be catalysts for innovation in the Indian mining industry.

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