Going underground: India needs to dig deep to keep lights on

Sun Oct 21, 2012 6:23pm EDT
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By Jo Winterbottom and Malini Menon

DHANBAD, India (Reuters) - The slick mechanized operations at the Piparwar open-cast mine in eastern India, an ugly gash in the landscape bigger than New York's Central Park, could lead the casual observer to conclude that the country's coal industry is on a roll.

Piparwar, run by the state miner, produces some of the lowest-cost coal in India, just what's needed for a country struggling to get enough of the "black diamond" to fix a power crisis that recently plunged half a billion people into darkness and chokes economic growth.

With oil and gas output disappointing and hydropower at full throttle, Asia's third-largest economy still relies on coal for most of its vast energy needs. About 75 percent of India's coal demand is met by domestic production and, according to government plans, that won't change over the next five years.

The hitch is that India is running out of cheap open-cast coal from existing mines like Piparwar. Unless it starts investing now in underground mines, within a decade it will face a huge leap in energy import costs that could derail industrial projects, crimp economic growth and drive up inflation.

"With the ballooning demand for coal in India, open-cast mining has become the easy option, albeit at a great cost to the environment and society," said a senior executive at a power company, speaking on condition of anonymity.

"This easy option is likely to be exhausted within the next 10-12 years when the shallow seams amenable to open-cast mining dwindle."


Coal India Limited, the state-run miner that produces 80 percent of the country's coal, recognizes the need to raise the amount that underground mining contributes to total output from just one tonne out of every 10.   Continued...

A truck is loaded with top soil at the Jharia burning coal field at Dhanbad district in the eastern Indian state of Jharkhand September 17, 2012. REUTERS/Ahmad Masood