Cement Industry is all about Minerals
This being so, the cement industry in India has earned the ire of climate watchers. It is being said that Asia's (read China and India) appetite for coal is harming the health of our planet. The government policies in India has come in for criticism, in so far as they have not done enough to dis-incentivise growth of consumption of coal, both in power and cement sectors. The diametrically opposite perspective is that India is very low in per capita consumption of cement, and we have to move from 200 kg per capita to at least 500 kg as our housing and infrastructure mature. Besides, Indian cement industry is the most efficient one globally, as measured by specific consumption of energy per tonne of cement produced. When we add this line of reasoning to the fact that we hold the third largest deposit of coal in the world, a very compelling logic develops in support of growth of coal-fired cement plants, even as all out efforts are made to establish and commercialise carbon capture technologies to mitigate the climate impact of this strategy.
All this, then, brings us to the state of coal mining in India. Here, there is no good news to offer. Largely controlled by monopolistic state-run behemoth(s), the domestic production of coal has been languishing, while the demand has been growing. The situation with coal supply is so bad, that the Power Secretary was recently quoted as saying that the current situation was absolutely untenable when India is not able to exploit annually even 1 per cent of its explored coal reserves. According to him, some five lakh crore of power sector investments are in jeopardy because of the failure of the coal mining activities to ramp up. He went on to say that we need to get five large global players to come in, who could produce 500 million tonnes of coal in the span of next two to three years. Such statements were neither surprising nor revolutionary, simply because just a few weeks back, in a "so called" big bang foreign investment policy announcement, the government allowed 100 per cent foreign investment in coal mining through the automatic route.
While that policy tweak may sound like sweet music to mining biggies, it may raise the hackles of climate activists. Be that as it may, we are left wondering how much of foreign investment will our domestic coal mining sector will eventually be able to attract, given our famous lack of policy consistency. Let us wait and watch.
Sumit Banerjee Chairman, Editorial Advisory Board