Essar-Hindalco, Reliance Power gets conditional aproval for mining in coal blocks in Madhya Pradesh

An empowered group of ministers (EGoM) on Wednesday gave Reliance Power and Essar-Hindalco the go-ahead to start mining at two coal blocks allotted to them, albeit with some riders.

The approvals were for Reliance Power to start mining coal from the Chhatrasal block and for Essar-Hindalco to start mining from the Mahan block.

Together, these two blocks will fire up a power capacity of over 10,000 mw.

The EGoM has, however, issued some 15 riders for these companies to follow once they start mining coal from these blocks.

The companies will have to shell out 5% of their project cost towards corporate social responsibility activities. Also, they will have to mitigate their action through parallel means if they destroy any forest area and effect the wildlife and must undertake compulsory afforestation of land area equal to that destroyed by the mining activity.

The Mahan coal block, located in Singrauli fields in Madhya Pradesh, is estimated to have a reserve potential of 150 million tonne of thermal coal and will feed the upcoming power plants of Essar Power and Hindalco Industries, the flagship subsidiary of the Aditya Birla Group.

The coal block is currently held by Mahan Coal, a joint venture company equally held by Essar Power and Hindalco Industries. While Essar has an off-take agreement of 60%, or 5.4 million tonne per annum (mtpa), of coal from the block to feed its upcoming 1,200 mw power plant in the state, Hindalco will take the remaining to fuel its 750 mw power plant. Hindalco has an off-take agreement of 3.6 mtpa of coal from the coal block.

Hindalco’s power plant will, in turn, supply captive power to its upcoming 359 kilo tonne per annum aluminium smelter — the Mahan Aluminium project — which is likely to be commissioned in the current fiscal.

“This is a big boost for Hindalco as without coal its aluminium smelter project would have been a loss-making exercise,” an analyst had told DNA Money earlier.

Similarly, for RPower too, the EGoM nod provides visibility for two of its most ambitious projects coming up in the Madhya Pradesh.

Coal from Chhatrasal will be extensively used for its 4,000 mw Sasan ultra mega power project and the 4,000 mw Chitrangi project.

“At its peak production, Chhatrasal coal block would produce 5 million tonne per year. Along with Moher & Moher Amlori Extn coal blocks, the total coal production is expected to be 25 mtpa from Sasan mines,” said a company note.