NTPC’s First Coal Mine Delayed as Local Protests Turn Violent

NTPC Ltd. (NTPC), India’s biggest power producer, has been blocked from starting its first coal mine in the country by villagers demanding higher compensation for their land, stymieing its plans to secure local fuel supplies.

Violent protests have halted work at the Pakri Barwadih mine in eastern state of Jharkhand, Chairman Arup Roy Choudhury said in an interview in New Delhi. The villagers are stealing from the mine, which has been developed by Australia’s Thiess Pty and scheduled to start this month, he said.

“Mining there has started, but it’s illegal mining,” Roy Choudhury said. “We’re counting on the provincial government to restore law and order there.”

A shortage of coal to fire its blast furnaces is prompting New Delhi-based NTPC to seek supplies overseas. India produced 558 million metric tons of coal in the year ended March 31, trailing a demand of 696 million tons and the gap is expected to widen through the year ending March 2017, according to Coal India Ltd., the world’s biggest miner of the fuel.

Hurdles in acquiring land are standing in the way of several mining projects, including those of NTPC, Coal India and Steel Authority of India Ltd. Wide income disparity in regions where these mines are located is stoking local resistance to industry, leaving swathes of mineral resources untapped.

A group of protesters damaged equipment and threatened officials, ignoring the support of the majority of local villagers, federal power minister Jyotiraditya Scindia wrote in a Jan. 13 letter to Jharkhand Chief Minister Hemant Soren.

NTPC expected to produce 3 million tons of coal from the mine in the year to March 31, about 1.7 percent of its total requirement, according to a presentation on its website. The company expects coal imports to peak to 22 million tons in the year ending March 2016 and decrease to 12 million tons the year after as its own mines reach full capacity.

The company has rights to 10 coal mines, which together have an estimated reserve of 5 billion tons. The mines are expected to produce 33 million tons, or 15 percent of NTPC’s requirement, by the year ending March 2017.

The utility runs plants that can generate 42,454 megawatts, more than a fifth of India’s generation capacity.

To contact the reporter on this story: Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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