Mining giant Coal India will not have the luxury of keeping its loss-making mines to stay competitive after coal block privatization, a senior government official said Monday.
India is also expected to have a surplus of coal for thermal power plants by next year, despite power demand growing by 6%, he said.
“Reforms will make the coal sector more dynamic for solid fuel consumers, but there will be a change in mining activities. I think Coal India will not have the luxury of dragging out loss-making mines and continuing with financially inefficient mines,” said Coal Minister AK Jain, speaking at a conference organized by Mjunction.
Last year the Maharatna public sector company announced it was closing 23 unprofitable mines, including open pit and underground blocks, as it would help the company save around £500m, all costs considered.
The world’s largest coal miner has shut down 82 mines in the last three to four years.
“Underground mines are a prime focus for closures as they are not profitable. Some 158 such mines employ 43% of the labor force but contribute only 5% of total production,” a Coal India official had previously said.
Mr Jain also hoped there will be a surplus of coal for thermal power plants by next year as solid fuel production in the country is ramped up by captive miners.
The captive sector is expected to produce 130 million tons of coal next year.
Pramod Agrawal, Chairman and CEO of Coal India, said at the event that solid fuel will continue to play an important role in the country’s energy security in the next 10 to 15 years.
Demand for coal is increasing as renewable sources are not yet mature to meet energy needs, he added.