Coal India and BHEL - two Maharatna central public sector companies - on Wednesday announced the signing of a joint venture agreement for setting up an ammonium nitrate plant through surface coal gasification technology in Odisha.

Coal India will hold a 51 per cent stake in the joint venture while BHEL will hold the remaining 49 per cent. The JV will set up a plant in the Lakhanpur area of Mahanadi Coalfields Limited to produce 2000 tons of ammonium nitrate per day initially. The annual production is estimated at 6.60 lakh tons which would require 1.3 million tonnes of coal, that would be supplied by Coal India, while Bhel would provide indigenously developed gasification technology.

Coal India would also have to ensure offtake of at least 75 per cent of the rated annual production capacity of the project, envisaged in the pre-feasibility report, subject to mutual acceptance of quality and prices after the finalisation of the detailed feasibility report, according to the stock exchange filing by the miner.

Projects and Development Indian Limited, a government-owned design engineering and consultancy company will prepare the detailed feasibility report of the proposed plant.

Ammonium nitrate is a major ingredient in the manufacture of bulk explosives which Coal India uses in large quantities in its open-cast mining operations. The proposed plant would therefore be a backward integration for the miner towards securing raw materials and lowering import dependence.“Gasification is the highest priority area for the Ministry of Coal. In the next 2-3 years there will be sufficient coal,” said coal secretary Amrit Lal Meena.

Coal India in a statement said that it will also pursue alternative uses of coal for environmentally friendly ventures like coal gasification. Surface coal gasification can also be used to make syn gas which on further processing can be used as alternative natural gas. It also has use as feedstock for downstream chemicals production and for power generation.

Coal India said that physical possession of land for the project is in progress and is expected to be completed by September 2024.

Coal logistics planUnion coal minister Pralhad Joshi is expected to launch a coal logistics plan and policy on Thursday. The policy will provide a framework to catalyse demand and supply within the coal sector by FY 2030. Coal ministry plans to produce 1.5 billion tonnes of coal from domestic sources by FY 2030.

The coal ministry also reviewed production from captive and commercial mines on Wednesday. The total production from 54 producing mines was 125.33 MT from April 1 2023 till February 26, 2024, against 99.5 MT in the same period previous fiscal, up 26 per cent year on year ends.