Professional Documents
Culture Documents
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%.
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.
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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.
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
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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.
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:
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
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:-
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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.
MISSION
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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.
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
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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.
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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.
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:
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2) Washery Linked Coal
4) Semi Low Volatile Coal for Power plant and other industries
4) Washery Slurry and rejects for brick kiln and other industries
Types of coal
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.
1. 18%<Washery I<21%
2. 21%<Washery II<24%
3. 24%<Washery III<28%
4. 28%<Washery IV<35%
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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.
By Products:
Apart from these products BCCL is also selling hard coke and it’s by product coal tar and
mainly washery by products.
By products of Washery:
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.
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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:
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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)
15
Company should focus on greater realization of coking coal which will increase the
profitability.
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.
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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.
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.
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.
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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
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:
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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:
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
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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
(Fig in Rupees)
(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
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Out of the seven coals producing subsidiaries one is making loss while the others have made
profits during 2008-09.
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.
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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.
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
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face a lot of problems in doing their work which results in dissatisfaction of work,
low O.M.S and increment in cost.
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.
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:-
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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.
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.
In BCCL there has been constantly pay revisions done which led to the increment of salaries
wages. Following are the revision made—
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
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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.
• 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.
Amount in crores
• 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
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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:-
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.
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
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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.
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.
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
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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:-
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.
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:-
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.
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Op. Manpower 92268 87146 83578 80051 76565 72469 67951
Reduction ( - )
other means
VRS 1118 51 - - - - -
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.
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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.
* 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.
from Dec’06. During the period Jan’07- Sep’07, e-booking under which ceiling was fixed as
follows:
** The bidding could not be held during Oct’07 (07-08) due to introduction of
*** 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
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final products of combustion being at reference temperature at 250C and the water obtained
from fuel being the liquid state.
PROJECT TITLE:-
32
UNDER THE GUIDANCE OF:- M.H QURAISHI. (MINE MANAGER BLOCK II AREA BCCL)
By:-
Xth Sem
ME and MBA
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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
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
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.
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 %
36
37
PROBLEM EXISTING AT BLOCK II AREA:-
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
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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.
39
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.
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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