Govt eyes private sector partnership for coal exploration

New Delhi: The Centre is looking at partnering with private companies to hunt for coal deposits as it sets out to tap its vast reserves of the fossil fuel amid growing power demand.

Currently exploration in carried out exclusively by government entities like the Central Mine Planning & Design Institute (CMPDI), Geological Survey of India, Mineral Exploration Corporation (MECL), and state-government agencies.

According to the Action Plan for FY26 of the union coal ministry, the government will look at promoting participation of the private sector in coal exploration with state-run entities. A new exploration strategy is in the works as the ongoing scheme to boost exploration of coal is scheduled to end this fiscal.

Exploration of coal and lignite is undertaken in two stages—promotional and detailed. The action plan noted that potentially large coal-bearing areas still need to be explored.

"New exploration strategy is proposed to be adopted to intensify exploration in the remaining area and complete promotional exploration within 10-15 years. The objective is to saturate entire prognosticated coal bearing area. Government has approved continuation of 'Exploration of Coal and Lignite scheme' under Central Sector Scheme, with a total outlay of ₹2,980 crore, for five years, from FY21-22 to FY25-26," it said. 

The financial outlay (BE) for FY25-26 is ₹750 crore.

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The action plan said that exploration drilling target for FY26 is 1 million metres through central sector schemes, National Mineral Exploration Trust, Coal India Ltd or private sector funding.

It also said that the government would look at revising exploration guidelines for forest areas to include 2D and 3D seismic survey.

It noted that the government would "promote private sector partnership" and "prioritize exploration in high GCV (Gross Calorific Value) and coking coal bearing areas".

Although exploration is open to private companies, they are not present in this space due to entry barriers, land acquisition delays and legal hurdles. Private players are mostly invested in production and commercial operations, that too only after the sector was opened in 2020.

Noting that land acquisition delays and legal hurdles have slowed down exploration in coal bearing states like Jharkhand, Odisha and Chhattisgarh, the standing committee on coal, mines and mines in a report in March suggested the coal ministry accelerate the use of advanced technologies, enhance engagement with private firms through open-bidding and incentives, and simplify entry barriers for private exploration agencies.

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"In terms of coal exploration government organizations are adequately placed. Coal exploration is not a very technologically challenging or difficult process, as it is a bulk product, unlike critical mineral. However, if private players come in, more efficiency can be expected with new technological tools," said an industry executive on condition of anonymity.

India has the fourth largest reserves of coal and in the past three years it has touched record production levels amid a renewed focus on thermal power. Last fiscal, for the first time India's coal production crossed the 1 billion tonne mark. For FY26, the government has set a target of 1.15 billion tonnes as part of a trajectory to reach an annual capacity of 1.5 billion tonnes by FY30.

The private sector is involved in the coal sector as mine developers and operators (MDO) where they operate mines owned by state-run companies under the government's asset   monetization plan for public sector undertakings. They are also directly involved in mining through commercial and captive mines.

The action plan further said that the ministry plans to operationalize more than 20 new mines with an aggregate of over 80 million tonnes per annum (mtpa) during FY25-26. This is part of the ministry's vision to enable on-demand coal supply capacity to consumers by FY46-47.

"The creation of additional coal production capacity is needed to boost coal production as well as replace depleting mines. Accordingly, the ministry has set a target of opening 100 new mines intending to create an addition in coal production capacity of 500 mtpa by FY29-30. 13 mines were operationalized in FY24-25 with capacity 83 mt," it said.

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