India plans to triple coal production from underground mines

India plans to triple underground coal production by 2030 as part of efforts to increase the overall availability of coal in the domestic market and reduce imports, Argus reports.

The federal coal ministry has set an overall target for underground coal production of 100 million tonnes by 2030, according to a government statement. In the April 2022-March 2023 fiscal year, India produced about 35 million tonnes of coal, with state-owned Coal India (CIL) accounting for most of the output. It is unclear whether the underground mine production target refers to a calendar year or a fiscal year.

The plans are part of India's broader goal of increasing total coal production to 1.577 billion tonnes by 2030 from open and underground mines. Open pit mining accounts for over 95% of India's total coal production. Attention to underground coal mining is timed for the UN Cop 28 climate summit in Dubai, which starts on November 30, because underground mining is considered more environmentally friendly compared to open pit mining.

Delhi's plan to increase production from underground mines is not new, but over the past few decades, such projects have mostly not been implemented due to the higher cost of mining from such mines compared to opencast coal. The difference in cost becomes particularly significant as the prices of coal mined by CIL are at a significant discount to world prices due to extensive government control over notified prices. Some industry and government officials believe that the scale of mining, the introduction of new technologies and investment in the coming years will allow the gap between the cost of mining in open pits and underground mines to be closed.

Increased coal production will help increase domestic supplies to meet growing demand from utilities and boost the country's economic growth. India plans to add about 80 GW of thermal power generation capacity by 2031-32 as part of plans to ensure 24-hour power supply. India has 27 GW of thermal capacity under construction and has now decided to start work on at least 55-60 GW of additional capacity. As of October 31, India had installed 206.82 GW of coal-fired capacity, and the total thermal capacity, including lignite, gas and diesel, was 239 GW.

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