National Coal Index (NCI)

About Coal

1. Coal is a combustible sedimentary rock primarily composed of carbon.
2. Formation: Coal originates from peat, which is a soft organic material formed from partially decayed plant and mineral matter.
3. The states with the highest coal reserves are Odisha, Jharkhand, and Chhattisgarh, which together hold about 69% of India’s coal resources.

Types of Coal Found in India

1. Anthracite: This is the highest grade of coal, with a high carbon content. It is hard, shiny, and brittle, but found in smaller quantities in Jammu and Kashmir.
2. Bituminous: A medium-grade coal with a high heating value, commonly used for electricity generation. Major reserves are located in Jharkhand, Odisha, West Bengal, Chhattisgarh, and Madhya Pradesh.
3. Subbituminous: Black in colour and dull, this coal has a higher heating value than lignite.
4. Lignite: The lowest grade of coal, with the least carbon content, found mainly in Rajasthan, Tamil Nadu, and Jammu & Kashmir.

Key Reforms/Initiatives in the Coal Sector

1. Coal Mines (Special Provisions) Act, 2015: Enabled the auction of coal mines for private commercial mining.
2. Commercial Coal Mining Auctions (2020): The 1^st auctions for private entities to mine coal commercially were launched.
3. Mines and Minerals (Development and Regulation) Amendment Act, 2021: This act increased transparency and efficiency in mining license allocation.

1. It introduced the Composite Prospecting License-cum-Mining Lease (PL-cum-ML) for seamless mining operations and removed end-use restrictions for captive miners.

4. National Coal Index (NCI): NCI tracks coal prices from different sales channels and provides insights into market price fluctuations.
5. Foreign Direct Investment (FDI) and Technology: 100% FDI is permitted in coal mining, bringing in global expertise and technological advancements.
6. Amendment to New Coal Distribution Policy (NCDP): Allowed for transparent sales of coal from closed or discontinued mines.

Recent Initiatives to Boost Domestic Production

1. Integrated Coal Logistic Policy and Plan (2024): This policy aims to create a cost-effective and resilient coal transportation system.
2. Investment in Coal Gasification: A Rs. 8,500 crore initiative to promote coal and lignite gasification projects.
3. PM Gati Shakti-National Master Plan: Focuses on improving coal sector infrastructure.

Challenges in the Coal Sector

1. High Import Dependence: India relies on imports for coal with high Gross Calorific Value (GCV), which has lower ash and sulphur content.

1. Key import countries include Australia, Russia, South Africa, and the US.
2. Sectors like iron and steel heavily import coking coal, as domestic coking coal has an ash content of 28-42%, compared to less than 10% in imported coal.

2. Dominance of Coal India Limited (CIL): CIL produces over 80% of India's coal.

1. The Competition Commission of India (CCI) has noted that CIL operates independently of market forces and has been criticized for offering lower-quality coal at higher prices with non-transparent supply conditions.

3. Outdated Technology: Outdated mining techniques lead to lower productivity, higher costs, and safety concerns.
4. Logistics Issues: Coal transport costs are high due to limited multi-modal transport systems.
5. Environmental Impact: Open-cast mining causes irreversible damage which makes land unusable.
6. Land Acquisition and Displacement: Developing new mines often faces challenges related to land acquisition and the displacement of local communities.
7. Other Issues:

1. Unpaid dues by power sector consumers.
2. Frequent labour disputes in coal fields.
3. Unseasonal and prolonged rains in coal-bearing areas.