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Coal India Plans Heavy Spending to Increase Supplies
NEW DELHI - Coal India Ltd., the world biggest coal producer, plans to spend as much as 125 billion rupees ($2.2 billion) over the next five years to build 300 kilometers of railway tracks and improve underground mining operations to arrest near-stagnant growth in output.

Coal India slow output growth, due mainly to delays in environmental clearances and transport bottlenecks caused by poor rail and road links, is hindering its ability to provide enough coal to feed new or existing generating stations owned by power companies.

The investment plan is part of a strategy to use cash reserves of about 580 billion rupees, as of March 31, to improve productivity. The company, which provides more than 80% of India coal, reported a meager 1% growth in output in the year ended March 31, after reporting a negligible rise in the two previous years.

"We are in discussions with the railways to fund building of railway tracks in three major coal fields," S. Narsing Rao said by phone late Monday from Kolkata, where the company is headquartered.

"We have the money and they [Indian Railways] have the expertise," he said.

Poor or non-existent rail connections from some mining areas has meant coal is left stockpiled far from where customers need it.

The plan calls for new railway tracks at three major coal fields--North Karanpura in eastern Jharkhand state, Ib Valley in Orissa and Mand Raigarh in central Chhattisgarh state.

However laying the tracks is not likely to be an easy task due to land acquisition issues and security, as the areas in question are hotbeds of leftist guerilla activity.

Mr. Rao said Coal India plans to focus on boosting output from underground mines, as open-cast surface mining is more environmentally sensitive and requires more government agency approvals.

Of Coal India 471 mines, 273 are underground and the rest are surface pits. But the contribution of underground mines to the company output is small due to a lack of modern equipment and technology.

"We would like to equip our workers with modern technologies for increasing production...for that we have to make a sizable investment," Mr. Rao said.
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