Austrade’s South Asia senior trade commissioner Mike Moignard said since India’s coal mines were nationalised in the early 1970s, there has been a monopoly on coal blocks and coal sales in India, making it impossible for outside companies to secure coal mining leases.
“There are really only two coal companies operating in the country – Coal India, which is totally owned by the Government, and Singareni Collieries Company, which is also nationally owned,” Moignard said.
“So if you are an outside company wanting to get into the coal sector to take your own coal lease, it’s very difficult.”
While Coal India produces 450-500 million tonnes of coal a year from its opencut operations, the underground mining company Singareni produces just 50Mt a year.
Moignard said a recent change in the tightly guarded monopoly has allowed special purpose leases to be granted to captive mines for things like cement plants, power stations or steel plants.
Under these captive mine arrangements, Coal India provides a lease to a captive mine company that in most cases is owned by or in a joint venture with an end user.
“So if you were building a power station and you need a thermal coal plant you can now have a captive coal mine, but that mine is very restricted in terms of the use of the coal, as it has to be related to the end user. They have relaxed it a little bit in that if you have excess coal being produced it can be sold to Coal India, but you can’t market it yourself.”
Although the change marks a slight relaxing of the laws governing the coal industry, Moignard said the potential for them to change the monopoly situation is a long way in the future.
However, Moignard said now was a perfect time for Australian mining technology and services companies to discover and take advantage of the Indian market.
“We have got a number of Australian companies looking to sell technology and services into Coal India and Singareni, and also looking at the opportunities with the captive mines,” he said.
“We are seeing a huge need in the Indian coal industry for contract mining, exploration and engineering design software, IT solutions and management systems.”
Moignard said Surpac Mining Software already has operations in India, with Thiess also setting up operations in the country.
“Austrade has also been working with the Queensland Government to bring new technologies for coal washeries into India,” Moignard said.
“The potential for Australian coal washery operations in India is significant. Mincorp have been selling small coal washeries into the country and Sedgman is another one looking at the market here.”
India’s coal reserves are primarily low grade thermal coal and Moignard said entrepreneurial Indian companies had begun investing in Australian coking coal supplies.
“A number of Indian companies have come in and opened up coal mines in Australia, revitalised old mines or invested in joint ventures at new mines,” Moignard said.
“Indian coke producer Gujarat NRE Coke have bought and revitalised a mine near Wollongong [NRE No. 1 colliery], which is now producing coking coal for their operations in Gujarat.
“The company is now looking at more mines and developing more mines in Australia.”
Moignard said Tata group was another company which, having bought a small stake in Queensland’s Carborough Downs Coal Project, was looking at similar opportunities.
For Australian companies looking to break into the Indian coal mining industry and sell their goods and service, Moignard said the International Mining & Machinery Exhibition 2006 (IMME) – being held on November 22-25 – was a perfect starting point.
So far, over 50 Australian companies are exhibiting at the event, which is being held in Kolkata (Calcutta), India.
“Participation in IMME will allow Australian companies to showcase their technology and services to potential agents, distributors and end users including overseas visitors and delegates from many countries,” Moignard said.
