Ramesh Reddy

Senior General Manager Operations, AMR India

Policy dysfunction in the coal mining sector is rife to such an extent that we have become severely dependent on importing coal. On one hand, we are facing acute shortage of coal, while on the other; we are sitting on 290 billion tonne of coal reserve, which is well enough to meet our needs for the next 200 years. Why are we not able to get our act together and start cashing in on our own resources? Ramesh Reddy, Senior General Manager-Operations, AMR India, with an experience of more than 25 years in the industry, talks to ICR on what is stymieing the sector and what must be done. Excerpts from the interview.

Brief us about the services offered by AMR India.

AMR India, a mining service provider, was established as a partnership firm in 1992, under the able leadership of A Mahesh Reddy. The company has three business verticals, viz., infrastructure, irrigation and mining. We ventured into mining in 1994 after bagging a major contract from India Cements. Later, we also received contracts from India´s premier cement companies Chettinad Cement and JK Cement. In 2006, AMR India ventured into coal mining, and since then we have done several short-term contracts, We have worked on a short-term contract for Gujarat Industrial Power Corporation (GIPC). Currently, we have two more short-term contracts-GIPC and Singareni Collieries-in hand. We also bagged a three year short-term contract at Ramagundam (Andhra Pradesh) where we will be mining in 45,000,000 m3 (cubic metres) of area. Apart from these short-term contracts, AMR India has also bagged a few long-term ones, which is for a period of 15 years or more. In long-term contracts, the contracted company acts as a mine-developer-cum-operator.

At what point does AMR come into the picture?

In India, majority of the coal blocks are either owned by the government or by public sector companies like Coal India, Singareni Collieries, GIPC, etc. Only in few cases, the mines were allotted to private players [Tata, etc.] for captive power consumption. Recently, the government realised that Coal India (CIL) was unable to develop all the coal blocks, due to financial or other constrains. This forced the government to allot 208 coal blocks to different companies, mostly for captive power consumption. Initially, companies with thermal power plants were given preference.

Companies in Maharashtra and Gujarat received the project for mining one of the biggest coal mines in Odisha. The Rajasthan Electricity Board got one power block at Parsa Kente in Chhattisgarh, while the Chhattisgarh Electricity Board got a project at Parsa in Chhattisgarh. Similarly, the Punjab State Electricity Board-in association with GVKùhas developed a block near Ranchi (Chhattisgarh), which is called Tokisud.

Public sector power producers take care of rehabilitation & resettlement (R&R) in land procurement and then contract it to mining development and operation (MDO) service providers. Companies like us are given MDO contracts for coal excavation. National Thermal Power Corporation (NTPC) was allotted 11 coal blocks, of which two blocks were given to the MDO service providers.

So, have they started with mining there?

No. They have not yet started with mining as yet. After the procurement of land, mine operators have to get environmental clearances, relocate the people, set up mining facilities and conform to several rules and regulations, among various other obligations. These are socially-sensitive matters and takes a lot of time to sort out such issues. More than 200 plots were allotted for mining, but not more than 15-20 blocks have started producing coal so far. It is not that easy to start a mining project in this country.

Then, where is the hitch?

There are lot of statutory permissions that needs to be obtained. These include Stage-I and Stage-II clearances, getting permission from the villagers on R&R policies, etc. Besides, the villagers are sentimentally attached to those places and monetary payments are not sufficient to convince them for parting away with their homeland. And to top it all, our bureaucratic governance further adds to the delay and stretches the gestation period beyond reasonable expectations.

Every state has its own R&R policy and that creates a lot of confusion. Firstly, if people have to be relocated then they must be offered job compensation too. Secondly, if a forest area is affected by the mining project, then that area has to be compensated by conducting afforestation elsewhere. The problem is: States do not have enough land available for afforestation, plus the regulation requires the new land to be adjacent to existing forest. Taking permissions from the forest department and other government dignitaries takes a long time. NTPC was exempted from this process, whereby they were allowed to pay money as a compensation and did not provide jobs to the displaced. Whereas, in other cases, the mine owners have to make jobs available and have to setup colonies for rehabilitating those affected. Even schools have to be built, which requires special permission. Other activities that needs to be undertaken include making water and electricity available, building roads, etc. Everything has to be in place before the mining starts. This leads to delay.

Aren´t there any private agencies contracted to get these special tasks done on time?

Contrary to popular beliefs, such systems have not worked. The simple reason is that these activities require the authorities to take challenging decisions often pertaining to sensitive areas and communities. Hence, our bureaucrats take the easy way out, which is not to take any decision at all. They are never questioned. The file will remain pending and our bureaucrat will remain safe as long as they don´t take any call on the matter.

How do assess the availability of mining equipment in India?

Worldwide, opencast mining is done using the standard mining equipment. In India too, as far as public sector companies are concerned, mostly they use standard equipment. From 1995 onwards, most of the mining companies started facing scarcity of funds. This made it difficult to procure high-end mining equipment. As a result, Indian miners have resorted to other economical means. If you look at a typical dumper used in mining, it´s self weight to payload weight ratio is very low. A truck that carries 100T of load will itself weigh 100T. These machines are very heavy and rugged as they have to move on rough terrain and have to be stable and reliable to work in such environment. A typical truck that moves on road has better ratio of self weight to payload capacity. It weighs around 5-7T and can carry around 10T of materials. The mining industry hence have moved to such vehicles for transport. These heavy duty trucks made for mining, though rugged, are fuel guzzlers and are capital intensive. They are not manufactured in India and have to be imported from European or other developed nations.

The mining sector, post 1995, started offloading some batches to the private sectors who started using these trucks. Basically, they communicated the mining rules and regulations and established limits for private players. The private players would then operate within the confines of these conditions and would carry the mined material to the designated sites. Initially, the private players used regular tippers. Later they started adding Ashok Leyland 2518, Benz, Volvo with 280 HP and now 440 HP capacity to their fleet. Today these trucks haul more over burden (OB) than all the material hauled by mining equipment in the public and the private sector combined together. At Singareni Collieries, which has contracted private parties to remove 70 per cent of its overburden, about 65 per cent of the material is removed using small vehicles like Benz, Scania and Volvo tippers. And only the remaining 5 per cent is hauled through private parties using the designated mining equipment.

How about availability of washeries in the country?

In India, the grade of available coal is very low, and washeries will not make a huge difference. At the most it will reduce the ash content. Reduction in ash content has several benefits. Apart from saving on unnecessary cost of transporting the ash to thermal plant, it also helps in improving the boiler efficiency. In western countries, coal miners have tie-ups with washery service providers. In 2004, there was a hype that the coal sector in India will grow exponentially. Several coal washery service providers had set up their business in this period to cater to the projected market demands.

Unfortunately, because of delays and all kinds of convoluted rules and regulations, the coal mining industry did not pick up as expected. Today, we are sitting on the third largest coal reserve in the world. We must be able to export it, yet we are importing it. In fact, we are the third largest importers of coal. As a result the washery industry is not that well developed in the country.

As you have said, India has the third largest coal reserve in the wold and has around 293 billion tonne of coal in our reserves. Is this coal mineable?

A large portion of the available coal reserve is under the forest area. These forests are inhabited by tribals and they have to be given proper R&R before tapping those resources. These resources are not as easily available as one might think. When mining is done in such areas, there will be some adverse environmental impact. Clean mining with zero impact on environment exists only in books. A proper environmental study and its implementation must be done properly, which happens very rarely. Often, the slow bureaucratic process will keep the matters pending under the pretext of rules and regulations. So, not all resources will actually be available for mining.

Instead, the government should focus only on a few select reserves in the country that can be mined effectively. If we focus only on Chhendipada and Machhakata in Odisha, and Parsa Kente (Chhattisgarh) coal reserves, we will be able to mine around 70-80 MT of coal. This is as much as we are importing currently. If the government concentrates only on 20 such coal blocks, huge sums of foreign exchange can be saved.

What about the availability of drilling technology for the mining sector?

Earlier the industry was dependent on make-shift solutions. Drilling was done with equipment used for drilling bore wells. Now the industry has matured and is adopting modern drilling methods. Availability of technology is not an issue. Companies like Atlas Copco, Sandvik Asia, etc. have these technologies available for the Indian market. As far as open cast mining is concerned, we are not limited by drilling technology. But when it comes to drilling for exploration, we are seriously handicapped. We do not have professional organisations in India that can produce a detailed and technically reliable report. The agencies present in India may have the drill and a technician, but that hardly serves the purpose. What we need is a professional organisation that can deliver reliable and complete report. Whenever we need such data we have no choice but to turn towards professionals outside.

Where do you see mining industry moving in future and where does AMR fit in it?

As a mining service company, AMR has progressed from one to two year contracts to five year ones. Today, we are one of the top five MDO contractors in the country. We have several MDO contracts both in opencast and underground mining. AMR recently got a MDO contract from Bharat Coking Coal for underground mining. The contract encompasses four years of mine development and nine years of production work. We have used longwall mining method, which is latest in the field. It will be the largest mine in India of its type based on this technology.

In India, surface mining is more or less exploited. All the coal reserves are at shallow depths. We must now resort to underground mining. Earlier, in India, this was done using the board and pillar method, where coal was excavated manually. Later, the sector moved to semi mechanised mining using side discharge loader (SDL) and LDL. Mining sector in India is now gradually moving towards advanced method of mining such as longwall mining. Developed countries do it this way, but we are yet to catch up with the foreign counterparts. Longwall mining offers higher productivity when applied to underground mining. Increased awareness about the environmental impact, stricter R&R policies, rising cost of petrochemicals has made it imperative to look at underground mining based on modern ways.

What can be done to get the coal sector back on track?

The biggest hassle in the mining process is the time-consuming process for obtaining permissions, procuring land and getting through with the R&R policies. Thermal plant companies or other industry professionals are not very well versed with such activities. When we allot coal blocks, we cannot expect them to shift their focus from their core competencies. To start with mining they have to learn all this right from scratch, develop a skill base to tackle these new challenges and get the work done. Once the land is secured and made available for mining, all this newly developed skill set is no longer of use. So, why not have a separate independent organisation to do this on a chargeable basis for the industry? The independent body-whether private or government-can develop its own team to tackle all the regulatory challenges. It can handle multiple projects at the same time. This way we can avoid duplication of efforts as this independent organisation will have to interact with the same government body for different projects contracted to it. The industry people too will not have to re-invent the wheel and can focus on their core business. Perhaps this is one way to hasten the growth of this sluggish sector.

For example, NTPC gave execution order to Thiess Australia in 2007 for its at Pakri Barwadih Coal Mining project in Barkagaon Block of Hazaribagh District. Thiess is one of the biggest mining service provider in the world. If we had provided the land to them without any encumbrance, they would have had extracted huge volumes of coal from the mine by now. But that did not happen. They are unable to go to villages, get approvals, deal with Indian R&R services etc. This is not their field of expertise. In such cases government should intervene and facilitate on behalf of coal block owners so that the process goes ahead smoothly.

Secondly, the government, through the Coal Ministry, must ensure that every year around 2,000-3,000 first class mangers and the same number of foremen should be rolled out from the public sector companies. For this, the public sector companies must employ about 6,000 diploma and degree holders for a period of three years. These degree holders must be informed right in the beginning that it is a temporary job and that they will be awarded with second class fireman certificate at the end. If they wish to continue another year of service they can be awarded first class managers´ certificate. Unless immediate steps are taken for developing their skill set, it is difficult to meet the goal set by the Planning Commission.

These are few of my suggestions to the government for the betterment of the industry.