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India to Speed Plan to Save $300 Billion Burning Coal Belt

January 10, 2013

India Said to Speed Plan to Save $300 Billion Burning Coal Belt

Girls work to scavenge coal at an open-cast coal mine in the village of Jina Gora, near Jharia, India on Feb. 09, 2012. People living on the Jharia mines survive by selling the coal they extract illegally to the depots run by local politicians. Photographer: Daniel Berehulak /Getty Images

India approved a plan to speed up the relocation of more than half a million people living atop mines in the eastern part of the country where $300 billion worth of coal is burning away.

The cabinet today approved building bigger houses for the residents of the Jharia coal fields, Panchayati Raj Minister V. Kishore Chandra Deo said in an interview in New Delhi. Inhabitants of the 110 square mile (280 square kilometer) area, who make a living from illegal mining of coal, refused earlier offers to relocate to government-built housing. The main complaint was the units were too small and the area had no jobs.

Vacating the area is critical to the government’s efforts to douse the century-old mine fire and use the coal to run India’s steel mills for the next two decades, and replace imports from companies including BHP Billiton Ltd. (BHP) The residents suffer from respiratory diseases and face the threat of mine collapse that has swallowed houses.

“The biggest reason why people don’t want to shift is the lack of employment at the new sites,” said Prashant Kumar, managing director at the Jharia Rehabilitation Development Authority, one of the two agencies executing the project. “Residents have been demanding they be given money and jobs, instead of houses.”

Bigger Homes

The revised proposal will increase the size of the houses near Jharia in eastern India to 25 square meters (269 square feet) from 18 square meters, said three people familiar with the plan, asking not be identified pending an announcement. Larger homes without work may not be enough.

“On the one hand we are importing more coal and on the other we are letting our best reserves burn,” said Prasad Baji, an analyst with Edelweiss Financial Services in Mumbai, who tracks metals and mining companies. “Saving Jharia can be a significant step toward building steel projects in India.”

India imports about 80 percent of its coking coal, while an estimated 1.9 billion metric tons are buried under the Jharia and Raniganj mines in the adjacent states of Jharkhand and West Bengal. At the current spot price of $160 a ton, the reserves hold more than $300 billion of coal.

Coal imports climbed 63 percent to 32 million tons, costing steel mills a record 424.7 billion rupees ($7.8 billion), in the year ended March 31 as contract prices rose to a record $330 a ton.

India’s steelmaking capacity is expected to rise 50 percent to 120 million tons by 2020, said A.S. Firoz, chief economist at the steel ministry.

“The nation’s steel industry is overly dependent on imported coking coal, which exposes them to price and supply volatilities,” Firoz said in a phone interview. “There’s a genuine demand from steelmakers to save Jharia.”

Divert Tracks

In 2009, the government approved a 97.7 billion rupee project to relocate the residents and divert railway tracks and roads passing over the mines. The earlier plan was scheduled for completion in 2020, a timeline the coal ministry and the state governments consider unrealistic.

“Given our rudimentary staff, it’s difficult to imagine we’ll be able to complete the project on time,” JRDA’s Kumar said.

The rehabilitation will require more than 2,400 hectares (5,930 acres) of land, which the Jharia Rehabilitation Development Authority and Asansol-Durgapur Development Authority have been assigned to buy, he said. Half the funding will come from the federal government, while the rest will be raised through a 6 rupee-a-ton tax that Coal India Ltd. (COAL), the state-run monopoly which owns the fields, collects from customers.

Illegal Trade

People living on the Jharia mines survive by selling the coal they extract illegally to the depots run by local politicians, said a coal ministry official, requesting anonymity.

The illicit coal trade, which has spawned an alternate economy comprising transport services, groceries, garment shops and food outlets, encourage the residents to brave the health hazards and the mine accidents.

A bid to forcibly shift the people two years ago led to police firing on a crowd, killing three people, Kumar said. In 2007, a family of seven was buried in a mine that caved in.

“These people would rather die of the coal fires than from hunger,” said Satya Bhushan Singh, the editor of a local newspaper run by his family.

Bigger houses and delays can raise the cost of the project substantially, considering that the prices of land, raw materials and machinery have risen since the first estimate was made three years ago, Kumar said.

Bharat Coking Coal Ltd. and Eastern Coalfields Ltd., the two Coal India units that operate the Jharia-Raniganj mining belt, employ a combined 40 percent of the group’s workforce and produce 7 percent of its coal.

To contact the reporter on this story: Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net


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