Coal India, BHEL Team Up for Ammonium Nitrate Plant in Odisha

Coal India shares opened with a nearly 1% gain on the National Stock Exchange on 29-February following the announcement of a joint venture agreement with Bharat Heavy Electricals Limited the previous day. The agreement aims to establish an ammonium nitrate plant as part of a planned coal to chemical business venture.

Plant Details

Under the agreement a new entity will be established in Odisha with Coal India holding a 51% stake and BHEL owning the remaining 49%. The initial focus of this venture will be the establishment of an ammonium nitrate plant utilizing BHEL's pioneering Pressurised Fluidised Bed Gasification technology.

The planned plant is expected to have a daily production capacity of 2000 metric tons and an annual output of approximately 6.60 lakh tons. To fuel operations CIL will supply 1.3 million tonnes of coal annually. The joint venture company to be incorporated in Odisha as a private limited entity will commence with an initial paid up share capital of ₹1,00,000. Coal India and BHEL will each have the authority to nominate three directors to the joint venture company's board, according to disclosures made to the exchanges.

National Objective & Financial Highlights

This collaboration aligns with the National Coal Gasification Mission's objectives emphasizing the exploitation of coal's chemical properties. Ammonium nitrate a crucial component in explosives used in CIL's Open Cast mining operations will now be produced domestically, enhancing self sufficiency and reducing reliance on imports.

The establishment of the ammonium nitrate plant signifies a strategic backward integration move for CIL ensuring a secure supply of raw materials critical for its operations. Additionally, this venture highlights the commitment of both companies to explore innovative avenues for value creation and sustainable growth.

Meanwhile, Coal India and GAIL signed an MoU to establish a Coal to Synthetic Natural Gas project in Burdwan district. The estimated project cost is ₹13,052 crore highlighting its commitment to diversification and modernization. These moves signify CIL's shift from conventional coal mining to becoming a significant player in the energy and chemicals industry.

Also read Coal India signs MoU with Haryana Power Purchase Centre, Stock Jump

In the third quarter of the fiscal year 2023-24, Coal India reported a net profit of ₹9,069.19 crore marking an increase of 16.94% from ₹7,755.55 crore in the previous fiscal year. BHEL recorded a net loss of ₹163 crore for the same period against ₹31 cr profit in December 20222. As of 31 December 2023 the Government of India maintains a majority stake of 66.13% in CIL reaffirming its strategic importance in the country's energy landscape.

Final Words

The partnership between CIL and BHEL marks a new phase of innovation and diversification in India's energy sector. Through their combined technological skills and partnerships they aim to foster sustainable growth and support the country's energy security and self sufficiency objectives.