Coal India, BHEL Join Hands To Establish Ammonium Nitrate Plant
Coal India (CIL) and Bharat Heavy Electricals (BHEL) have inked a significant joint venture agreement aimed at establishing an ammonium nitrate plant, marking a significant step towards advancing the coal-to-chemicals sector. The agreement, announced on Wednesday, signifies a strategic move in leveraging resources and technology to diversify operations.
The joint venture will inaugurate the 'coal to chemicals' business by pioneering a 2,000 tonnes per day ammonium nitrate plant. This project will be powered by the innovative Pressurised Fluidised Bed Gasification technology developed by BHEL, as confirmed by the companies in an exchange filing.
Under the terms of the agreement, Coal India will hold a majority stake of 51 per cent in the joint venture, with BHEL securing the remaining 49 per cent. The registered entity will be headquartered in Odisha, operating as a private limited company with an initial paid-up share capital of Rs 1 lakh.
Furthermore, both entities will exercise their rights to nominate three directors each to the board of the joint venture company, ensuring equitable representation and collaborative decision-making.
As part of its commitment, CIL will guarantee the offtake of 75 per cent of the rated annual capacity of the project as outlined in the Pre-Feasibility Report. The projected annual production stands at 6.60 lakh tonnes, necessitating 1.3 million tonnes of coal, which will be supplied by CIL.
The establishment of this joint venture follows the Union Cabinet's endorsement of two coal gasification projects earlier, involving partnerships between Coal India and GAIL, as well as Coal India and BHEL. These projects are slated to be operationalized by 2028-29.
Notably, the estimated project cost for the coal-to-ammonium nitrate initiative in Odisha is Rs. 11,782.05 crore.
Commenting on the significance of gasification, Amrit Lal Meena, Secretary of the Ministry of Coal, highlighted its pivotal role, stating, "Gasification is the highest priority area for the ministry of coal. In the next two to three years, there will be sufficient coal."
India's emphasis on underground coal gasification stems from its potential to unlock vast coal reserves that are otherwise difficult to access due to depth, scattered locations, and forest cover. The utilisation of syngas technology aims to convert non-mineable coal/lignite into combustible gases through in situ gasification processes.
Ammonium nitrate, a crucial ingredient in bulk explosives manufacturing, holds particular importance for CIL's open-cast mining operations.
The establishment of the upcoming plant, serving as a form of backward integration, is expected to enhance raw material security and reduce dependency on ammonium nitrate imports, as stated by government officials.
The collaborative effort between Coal India and BHEL signifies a concerted push towards innovation and diversification within the coal industry, potentially reshaping the landscape of India's chemical production sector.
