By -
Jan 9, 2013
India will consider speeding up
relocation of more than half a million people living atop mines
where $300 billion worth of coal is burning away, said three
people familiar with the plan.
Inhabitants of the 110 square mile (280 square kilometer) Jharia coal fields, 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. Coal ministry spokesman N.C. Joshi declined to comment before a cabinet meeting scheduled for today.
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. 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.”
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 the people, who asked 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.”
Coal imports climbed 63 percent to 32 million tons, costing steel mills a record 424.7 billion rupees, 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.”
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.
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.
“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 mines, 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
Inhabitants of the 110 square mile (280 square kilometer) Jharia coal fields, 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. Coal ministry spokesman N.C. Joshi declined to comment before a cabinet meeting scheduled for today.
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. 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.”
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 the people, who asked 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.”
Coal Exposure
India imports about 80 percent of its coking coal, an estimated 1.9 billion metric tons of which 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, 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.”
Illegal Trade
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 plan is slated for completion in 2020, a timeline the coal ministry and the state governments consider unrealistic.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.
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.
Mine Deaths
A bid to forcibly shift the people two years ago led to police firing on a crowd, killing three people, JRDA’s 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 mines, 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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