Why did GMDC decide to step out of Gujarat?

Fuel security is an issue for the Gujarat government. There was a demand from the state to secure our resources upstream.So in November 2022, six teams formed by GMDC visited seven states to study 38 coal blocks. The company’s board of directors permitted bid in nine of these blocks in Rajasthan, Madhya Pradesh, Chhattisgarh and Odisha. In these blocks, we won two fully explored mines. We will have to commission these mines in the next three years, for which we will have to invest in excess of Rs 5,000 crore in the next 5-7 years.
The money we earned mining lignite in Gujarat, will now be ploughed in Odisha. Despite being a company in the western region of India, a non-coal area, it has a lot of strengths to its credit. We have made money with a stripping ratio of 15 (15 tonnes of soil or waste, has to be mined to get one tonne of lignite). The stripping ratio in our acquired blocks in Odisha is 1.5.

What are the challenges of negotiating with the Odisha government?

New mining projects are full of challenges. There will be issues related to land acquisition, relocating villages, winning the hearts of local leadership, and worrying about alternate livelihood. How you overcome these challenges defines a successful or a failed project. If these two blocks go as per the timeline, this will be a significantly large and important company, and by that time, we are already working on several other things.
Before we open the coal mines in both blocks, three institutions carrying the name of Gujarat will be first set up in Odisha. We will be opening a public school, a corporate hospital and a sports academy which will be heavily subsidised for inhabitants of the region. We are not going there to loot. We are going there to become partners. We want to win their hearts and do our work and not hide behind the police and make a land acquisition. This company has the money to take care of the people who will be displaced, and resettle them. GMDC will stay in Odisha, and we will only return if we fail.
The company will also launch a skilling and employment programme for locals, which we are already running in Gujarat. We will pick one boy from every family, skill them, and give them jobs. It’s not like what Coal India does – making one a labourer. We will test aptitude and find a job. We will train in partnership with a private partner who has an assurance for placement. This will be done through an outsourcing model. In the next three months, we will also open an office in Bhubaneswar, Angul, Jharsuguda or Rourkela.

Where will the money come from?

For the financial year 2023-24, we have set an ambitious capital expenditure target of Rs 2500 crore. Rs 1500 crore were meant to be spent on land acquisition for new and old lignite projects in Gujarat. After winning these coal blocks, some money will be reprioritised and channelled to Odisha.

What will be the estimated number of Project Affected People(PAPs)?

The bigger of our two blocks, the Baitarani (West) block (in Angul district) will have 1400 project-affected households. This block, with 13 per cent forest cover, has coal reserves of 1097 million tonnes, of which 468 million tonnes can be mined through open pit mining. This project will require a capex of Rs 4125 crore. Similarly, the Burapahar block (in Sundargarh district) has about 477 project affected households. The estimated coal reserves in this block with 33 percent forest cover is about 548 million tonnes. This project will need a capex of Rs 950 crore.

Is this the first attempt to go beyond state’s boundaries?

A coal block allotted to GMDC in Chattisgarh had got cancelled several years ago.

How will GMDC benefit from the coal projects?

Currently, every year we mine 8.5-9 million tonnes of minerals. These two projects can become our backbone. The net worth of the company which currently stands at Rs 5,000 crore, will increase by four times by 2027-28.

Will GMDC also set up thermal power plants in Odisha?

That we will have to examine. For one Gigawatt G11, G12 grade thermal coal is perfect. To produce one Gigawatt we need 6.2 million tonnes (of coal) and in lignite we need 7.2 million tonnes. But these are back of the envelope calculations. We have already done pre- feasibility studies for all options , like retail sale…locked up supply agreement. Because Odisha is a also good consumption centre.