Coal India, BHEL to form JV to undertake coal to chemicals biz

State-owned entities Coal India and Bharat Heavy Electricals Ltd (BHEL) on Wednesday signed a joint venture agreement (JVA) for setting up an ammonium nitrate plant through surface coal gasification (SCG) technology route. The joint venture will “undertake coal to chemicals business by initially setting up a coal to 2,000 TPD (temperature-programmed desorption) ammonium nitrate Plant using BHEL’s in-house developed PFBG (pressurised fluidised bed gasification) technology”, as per the joint statement released by the Maharatna CPSE entities.

As per the release, Coal India will hold the ownership in the joint venture firm with a 51% stake, while BHEL will own 49% shares in the entity. Both PSUs will have the right to nominate three directors each on the board of the joint venture company.

The JV will be incorporated as a "private limited" company with an initial paid-up share capital of ₹1 lakh, with a registered office in the state of Odisha. The shares will be issued after the incorporation of the company in the ratio of equity shareholding, the release notes.

As per ministry of coal, the plant will be set up in Lakhanpur area of Mahanadi Coalfields Limited, Odisha, which is expected to produce 2,000 tonnes of ammonium nitrate per day initially. Physical possession of the land is under progress and will be completed by September 2024 after which construction activities will follow, it adds.

The annual production is slated at 6.60 lakh tonnes, which requires 1.3 million tonnes (mts) of coal, which will be supplied by CIL. BHEL will support the JV by providing indigenously developed pressurised fluidised bed gasification (PFBG) technology for this purpose.

“The synergy and partnership of the two corporate giants is a big step towards national coal gasification mission which facilitates utilisation of chemical properties of coal,” says the coal ministry.

Ammonium nitrate is a major ingredient in manufacturing of bulk explosives, which CIL uses in large quantities in its OC mining operations, a major source of its coal production. The upcoming plant as backward integration would help in securing the raw material, reducing import dependency of ammonium nitrate and promoting Atmanirbhar Bharat Abhiyaan, the coal ministry adds.

Amrit Lal Meena, coal secretary said that with the commitment of CIL and BHEL, this project will be a role model. “Gasification is the highest priority area for the ministry of coal. In next two to three years there will be sufficient coal,” he said.

All the possible support from the government is in place including financial support for viable gap funding, he adds.

As per the ministry, CIL will pursue alternative uses of coal for environment friendly ventures like coal gasification in the future after fulfilling the requirement of the power sector. SCG is a promising technology that converts coal into valuable Synthesis gas (also known as syngas), a mixture of carbon monoxide (CO) and hydrogen (H2). This further processing produces synthetic natural gas that can be used as alternative natural gas. Additionally, it can be used as feedstock for downstream chemicals production which are currently being imported, and forpower generation as well.

Projects and Development India Limited, a Miniratna design engineering and consultancy company has been assigned the work for preparing a detailed feasibility report of the plant.