Nigahi coal mine in Singrauli, Madhya Pradesh. Coal mines like these destroy forests, tribal communities and wildlife. © Greenpeace / Sudhanshu Malhotra
It appears that the world’s largest coal miner, destroyer of forests, tribal communities and wildlife alike, and one of the jewels in the Government of India’s crown, has been keeping quiet about the extent of its extractable reserves, which are at least 16% lower than what the company has been claiming in public. Legally, the company is required to make this information known to investors and the public, (it hasn’t) as it is a listed company and this information has a bearing on the company’s value.
The new figures, hidden in an obscure section of the website of the Central Mine Planning and Design Institute (a CIL subsidiary) shows that Coal India had only 18.2 billion tonnes of extractable coal as of April 2011, not 21.7 billion tonnes as the company claimed in its 2010 prospectus. The implications of this are manifold. For starters, this means that:
- Most of CIL’s total “proved reserve” of over 80 billion tonnes, is in fact not extractable, according to internationally accepted definitions. So the next time you hear someone say that India, or Coal India, has 100 years worth of coal, tell them that they are wrong.
- If Coal India meets its targeted production growth of 8% per year, its entire extractable reserve would be completely exhausted in 17 years. Or less.
- Any power plant under construction, constructed in the last five years, or planned to be constructed in the future, will face the very real risk of not having a secure coal supply for all or part of its 25 year lifetime.
- If our planners and ministers continue to push new coal power plants, India’s energy security will be severely compromised, and we will be made dependent on more expensive imported coal for our electricity. And guess who will have to pick up the bill?
- Given that Coal India supplies 80% of India’s coal and has been allocated 70% of India’s coal reserves, this also means that there isn’t much coal in the rest of the country either. So privatising mining or dismantling Coal India will not magically lead to an increase in the coal supply.
Coal India has a legal (and moral) obligation to disclose this information to shareholders, stock exchanges and potential investors, but has failed to do so, despite a letter from Greenpeace to the company management earlier this month. Greenpeace has now filed a complaint with the Securities and Exchange Board of India asking that the company be penalized for not informing investors of these developments, even as it is hoping to sell more shares on the market!
As Tom Sanzillo of the Institute for Energy Economics and Financial Analysis says, “If Coal India wants international investors, it must learn to play by international investment rules. A conflicted coal reserve estimate creates a misleading impression of company value”. As Comptroller of the State of New York, Sanzillo was responsible for the management of a $150 billion globally invested pension fund and avers that CIL shareholders have much to be unhappy about, with the company’s share price plummeting in recent months and a minority shareholder suing the company for selling its coal at throwaway prices.
The reduced reserve figures cast a new light on Coal India’s inability to raise production in recent years, and its attempts (wholeheartedly supported by Prime Minister Manmohan Singh, Finance Minister Chidambaram and sections of the Planning Commission) to weaken environmental and social safeguards such as the Forest Conservation Act and the Forest Rights Act. We can expect these efforts to intensify, as the coal industry strives to extract every last bit of coal it can, irrespective of the social and environmental costs to communities, forests and endangered species.
Ashish Fernandes is a Senior Campaigner with Greenpeace. Twitter: @ashishfernandes.