Coal India to Invest ₹50,000 Crore in Coal-to-Chemicals Push

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AuthorKavya Nair|Published at:
Coal India to Invest ₹50,000 Crore in Coal-to-Chemicals Push
Overview

Coal India Limited is embarking on a significant Rs 50,000 crore diversification strategy through three major coal gasification projects. These ventures will focus on producing downstream chemicals, including ammonium nitrate, and synthetic natural gas (SNG). The move aims to substantially reduce India's reliance on imported industrial feedstock and natural gas, marking a strategic pivot for the company toward integrated energy and chemicals production.

Strategic Diversification Beyond Mining

Coal India Limited (CIL) is initiating its largest diversification to date, allocating approximately Rs 50,000 crore towards coal gasification projects. This ambitious plan targets the production of downstream chemicals and cleaner fuels, positioning CIL as more than just a coal supplier. The initiative aligns with the government's National Coal Gasification Mission, designed to enhance energy security and reduce import dependency for critical industrial feedstocks and natural gas.

Key Projects Take Shape

The flagship component of this expansion is a 6.6 lakh tonnes per annum ammonium nitrate plant in Lakhanpur, Odisha. Developed through a joint venture with Bharat Heavy Electricals Limited (BHEL) under Bharat Coal Gasification and Chemicals Limited, this project is slated for commissioning by FY30 with an estimated investment of Rs 25,000 crore. Ammonium nitrate is a crucial raw material for explosives used in mining and infrastructure, as well as for fertilizer production, offering a domestic alternative to imports.

CIL is also pursuing two significant coal-to-synthetic natural gas (SNG) projects. One facility, with a capacity of 633 million normal cubic metres per annum, is planned for Bardhaman in West Bengal through a JV with GAIL India Limited, budgeted at Rs 13,000 crore. A second SNG project of similar capacity is slated for Chandrapur, Maharashtra, in partnership with BPCL, requiring an outlay of approximately Rs 12,200 crore. These SNG projects aim to supply cleaner fuel to fertilizer units and industrial consumers.

Long-Term Vision and Market Impact

Industry analysts view these coal-to-chemicals and gasification initiatives as offering more stable long-term demand visibility compared to traditional thermal power coal sales. By converting vast coal reserves into value-added products, CIL is strengthening domestic manufacturing supply chains and hedging its revenue streams against the evolving energy landscape. This strategic shift positions Coal India as an integrated energy and chemicals producer, set to play a key role in India's industrial growth and energy security over the next decade.
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