KOLKATA (miningweekly.com) – The ball has been set rolling for development of the Deocha-Pachami coal block, which at an estimated two-billion tons of coal is India’s largest.
The block has been allocated to the government of West Bengal for development and production from the asset.
Although development plans are yet to be worked out, indications are that the project will entail the adoption of the biggest underground mining operation in the country in recent years, with production of up to 40-million tons a year.
In fact, in anticipation of securing the country’s largest coal block, the West Bengal government earlier this year signed a memorandum of understanding with Poland to source equipment and technology for underground mining, government officials here said.
The officials said that back-of-the-envelope calculations indicate that a phased development of the block would entail an estimated $1.8-billion investment for an underground mining project to get the asset into production in the first phase.
The West Bengal government is toying with various options as a model for development of the block. Local mining agencies, like West Bengal Mineral Development and Trading Corporation or West Bengal Power Development Corporation, could be entrusted to undertake the project, which, in turn, would appoint a suitable mine developer-operator. Or the local government could look at a special purpose vehicle with any of the local agencies having a majority stake in it and offering a minority equity holding to an international mining major, the officials said.
While the production capacity target of the project has already been set at about 40-million tons a year, the implementing agency will be so modelled so that it does not entail any direct investments by the cash strapped West Bengal government.
According to government geological data available for Deocha-Pacham on depth-wise availability of reserves, about 1.078-billion tons of coal were available at depths between 300 to 600 m, 795-million tons between 600 m to 1 200 m and 152-million tons between 0 and 300 m.
It is pointed out that Indian mining companies do not have the technical expertise to mine at depths beyond 300 m and coupled with the fact that the reserve has thick overburden of laterite and basalt, underground mining with technology sourced from overseas, like Poland, was the only viable option to bring the asset into production.
While the West Bengal government is touting the reserve and project’s production capacity as the second largest single mining project in the world, mining technologists pointed out the challenges of sourcing underground mining technology, including adoption of using longwall in which India has tardy experience.
At the same time, finding ready buyers among thermal power plants for such volumes of coal from a single mine would be difficult and the project would need to incorporate production of coal-based specialty chemicals, methanol and coal-to-liquid to ensure optimal value realisations from the coal produced.