State, Market and the Crisis in Raniganj Coal Belt
Kuntala Lahiri-Dutt
The recent decision to close down 64 ‘uneconomic’ collieries in ECL’s jurisdiction would render 72,000
people unemployed, besides hurting the economy of the Raniganj coal belt. The decision was apparently
triggered by an ICICI report which has found that ECL’s losses are concentrated in its underground mines.
This article takes issue with the report and suggests that the proposed closure could be the first step towards
privatisation of coal mining.
UNTIL the 1960s a resource management
decision addressed such questions as
whether a project was technically feasible,
financially viable and legally permissible.
Since then a paradigm shift has occurred.
Instead of pure cost-benefit analysis in
economic or technical terms, resource
planners all over the world now include
‘impacts’ – both environmental and social
– in their analyses. Therefore, when one
comes across an old-fashioned economic
cost-benefit analysis these days, one raises
one’s eyebrows.
However, the matter assumes serious
proportions when a public-sector com-
pany uses such a ‘report’ as justification
for laying off as many as 72,000 employ-
ees. It then becomes imperative to take a
closer look at the report and the circum-
stances that produced it. Most of all, it
requires an understanding of how the report
is intended to be used – as a weapon
against the popular will – and of the
alternatives that were feasible for the
interest groups involved. However, let us
first take a brief look at developments in
the coal mining sector all over the world
and the response of the state-owned coal
mining industry of India to these develop-
ments.
Competition, declining mineral grades,
higher treatment costs, privatisation and
restructuring are issues that have been
putting pressure on mining companies to
reduce costs and improve productivity.
Employment is falling in many mining
areas – as a direct result of better produc-
tivity, radical restructuring and privati-
sation. Not only are these changes displac-
ing mine workers from employment; those
remaining in the industry are having to
work in a very different way, a way which
calls for more skills and greater flexibility.
Therefore, finding the right balance be-
tween the desire of mining companies to
cut costs and that of workers to safeguard
their jobs has become a major issue
throughout the world of mining.
Since 1988 the coal mining industries
in most of the world’s coal-producing
countries have undergone considerable
change. The driving forces have been
different and the results varied, but the
2952
central objective has been to make the
industry more competitive, more self-
sustaining and more viable as policy
changes in the areas of technology, the
environment and energy impose consid-
erable burdens on the production and use
of coal.
The essential objectives of restructur-
ing, according to the International Labour
Organisation (ILO) are to ensure energy
security and the meeting of demand for
coal – rather than attaining a predeter-
mined, inflexible production target – while
achieving increased productivity, lower
costs, higher quality and greater worker
safety and lessening the impact of mining
on the environment. The ILO recognises
that rationalisation will necessitate clo-
sure of mines, freeing of coal imports, a
review of subsidies, diversion of invest-
ment from non-coal-mining operations
and, in some cases, moves towards
privatisation. It has outlined two comple-
mentary lines of action: ensuring that an
adequate safety net is in place and pro-
moting non-coal-related activities in the
regions concerned.
The Indian coal industry is now caught
between the welfare approach of the state
and the effects of the market post-
liberalisation. It has begun to use recent
changes in a way that is quite in contrast
to what the ILO recommends. Coal India
(CIL), which controls all major manage-
ment decisions, including coal pricing,
transport and allocation, decided quite
some time ago to impart greater thrust to
open-cast mining to lower the cost of
production and increase output quickly.
It has initiated a technology change which
has helped increase production from about
90 million tonnes in 1977 over 250 million
tonnes per year at present.
This paper looks at the existing situation
in Eastern Coalfields (ECL) and discusses
the nature and purpose of a restructuring
plan prepared by the Industrial Credit and
Investment Corporation of India (ICICI)
which apparently falls in line with develop-
ments at the international level. It ques-
tions the viability of applying such gross
generalisations in any context. It also
argues that if environmental protection
Economic and Political Weekly
were given its due, open-cast collieries,
too, may not seem terribly attractive from
an economic point of view. The paper tries
to establish that the losses of ECL are
concentrated elsewhere – not in the under-
ground mines – and that instead of
downsizing its operations, the company
should clean up its act and look into the
manner in which it has conducted its
business over the years if it is to regain
profitability.
One of the 11 subsidiaries of CIL, ECL
had been making huge losses ever since
its inception and was becoming a burden
on the parent body. In 1997 it was referred
to the Board of Industrial and Financial
Reconstruction (BIFR) under the Sick
Industrial Companies Act (SICA), but
through financial restructuring it was able
to avert a crisis by a whisker. Unable to
solve its chronic ailments, however, ECL
has been handing over collieries on a platter
to private contractors over the last couple
of years. Several collieries in the Raniganj
region of West Bengal have already been
given over to private contractors to oper-
ate. In an attempt to formalise the process,
the company has now undertaken a com-
plex and convoluted exercise the dubious
intentions behind which are not apparent
to the casual observer. It is only after a
closer look at the region, the coal mining
industry and the manner of implementa-
tion and the cost of restructuring plans that
one can see the intentions for what they
are.
In July 1997, CIL approached the ICICI
for the development of a restructuring and
revival plan for ECL. This plan (popularly
called the ICICI report) was presented to
CIL in August 1998. At a meeting in
Calcutta in the last week of October, it was
recommended to ECL. It was then sent to
the coal and labour ministries for final
approval. On the basis of this report ECL
plans to close down 64 mines, most of
them located in the Raniganj region of
West Bengal, and retrench nearly 72,000
employees working in these mines. In
1997-98 ECL’s cumulative loss from the
64 mines, which produced 7 million tonnes
of coal, was Rs 4,200 million. But before
we look at the contents of the ICICI report,
October 9, 1999
let us discuss the special characteristics of
the Raniganj coal belt, where most of
these collieries are located.
MINING IN RANIGANJ BELT
ECL operates 121 coal mines, located
in Burdwan, Bankura, Birbhum and Purulia
districts of West Bengal and Dhanbad and
Godda districts of Bihar. As many as 117
of these are located in the Raniganj belt
of Burdwan district. In 1997-98 these mines
collectively produced 27.44 million tonnes
of good-quality thermal coal at 75.32 per
cent capacity utilisation. Raniganj coal is
unique in that it is of ‘long-flame high-
volatile-matter’ with quick heat-release
capability. It has specific applications in the
glass and ceramics industry, for example.
Nearly half of this production comes
from underground collieries – whereas the
share of underground coal production
nationwide is only 29 per cent – though
in recent years ECL has begun to place
greater emphasis on open-cast mining.
Underground mining is usually done by
the ‘board and pillar’ method: a mesh of
tunnels or galleries are first driven into the
coal seam, leaving coal pillars for roof
support. Twenty to 30 per cent of the coal
reserve is extracted in this ‘development
phase’. In the final, ‘depillaring’ phase,
the pillars are also extracted. If the surface
area is free from human settlements, it is
allowed to subside in this phase. If the
mine is under a town or a village, then the
holes are filled up with sand mixed with
water. This process is called sand stowing.
Not all coal deposited underground can
be extracted through this labour-intensive
process. Therefore, ECL has launched
open-cast projects with a high degree of
mechanisation in recent years. Open-cast
mines are located where coal occurs close
to the surface. Heavy machines remove
the soil and rock material, collectively
called ‘overburden’, to deposit it in a nearby
area in the form of huge dumps.
If sand is stowed properly, underground
mines have a less pronounced impact on
the environment. Open-cast projects
(OCPs), as they are operated in eastern
India, leave permanent scars on the land,
disrupt the natural processes of rivers and
soil formation, cause air and noise pollu-
tion, displace indigenous and peasant
communities and destroy valuable farm-
land in adjacent areas. That is why it is
that nowhere in the world is open-cast
mining recommended for densely-popu-
lated areas. However, worked as they are
in India without any attention being de-
voted to such considerations, OCPs yield
better returns though their life span is
shorter. In ECL, production from OCPs
Economic and Political Weekly October 9, 1999
has gone up more than twelvefold be-
tween 1975-76 and 1997-98 – from 1.23
million to 14.78 million tonnes.
In terms of capacity utilisation, how-
ever, the underground mines are really
much better than the open-cast ones. ECL
has some of the oldest underground mines
currently in operation in the country. The
deepest coal mine in Asia is at Chinakuri,
3,000 feet under the Damodar river. As
many as 80 of the company’s 121 mines
were inherited at the time of nationalisation
of the coal industry. The main problem
with underground mines is that they get
deeper and deeper as coal is extracted from
the shallower faces, which increases the
distance with coal, men and materials have
to traverse with the increasing age of a
mine. This of course has an adverse impact
on the productivity and the capacity of the
mine.
The older a mine, therefore, the more
the resources required to sustain produc-
tion at the rated capacity – which in turn
affects the economic viability of the mine.
This is significant because most of the
underground mines of the Raniganj belt
are quite old.
ECL has been a labour-intensive unit
since its very beginning. It is now the
single largest employer among the public
undertakings in the Raniganj belt – and
the largest landowner, occupying an area
of 1,260 sq km. Since underground mines
employ about 89.15 per cent of the
company’s manpower, the per capita
output of its mines is significantly low at
137.62 tonnes per man year. The produc-
tivity in some of these mines varies from
a low of 0.3 tonne to a high of 0.5 tonne
per man shift. If a purely economic cost-
benefit approach is adopted, therefore
ECL’s losses are seen to be concentrated
in underground operations.
A loss-making concern since the time
of nationalisation, ECL has been a typical
case of the public sector failing to deliver
the goods and sustain itself economically.
There has been no thorough enquiry into
its capital spending during the 25 years
since nationalisation. The company inher-
ited, along with the mines of private
companies, a whole range of problems –
environmental, social and economic –
some of which are unique and specific to
the region. The long history of coal mining
– the Raniganj region pioneered coal
mining in India – has left its imprint on
the region’s economy, physical environ-
ment, the attitudes, values, beliefs and
perceptions of its mining-linked popula-
tion and its socio-political scene.
The region has a land-dereliction prob-
lem, problems of an underground void,
land subsidence and mine fires, a problem
of dying agriculture and decaying com-
mons, and various manifestations of con-
flicts over resource use. These facts are
hard to ignore while preparing a plan for
restructuring and revival. Unfortunately,
it appears that the ICICI report looked
purely at the economics of mining, as if
mining existed in an abstract, theoretical
world. The environmental costs of
mechanised open-cast mining were not
included in its purview. Nor were the
social costs, involving displacement of
local communities and distress to them.
ENVIRONMENTAL CONCERNS
The entire range of precautions taken
and procedures adopted to make mining
the least harmful to human beings and the
environment is described as ‘best practice
mining’. In ECL’s plans for the environ-
ment, there is not even a mention of these
practices and no clear direction is given
by the administration to those involved in
mining on how to go about protecting the
environment. The best that has been done
by the company so far consists of tree
plantings here and there – sometimes on
old overburden dumps, sometimes on
leasehold land lying vacant and some-
times near the residential quarters of its
important executives. Many of these sap-
lings obviously die since they cannot
survive on the rocky overburden material.
Those which survive are of little use to
local communities by way of food, fuel
or fodder. The valuable topsoil, which
best practice mining stores and returns to
local communities after mining operations
are over, is lost wherever open-cast mines
are operated.
The level of urbanisation in the Raniganj
belt is as much as 67.27 per cent – much
higher than the Burdwan district (35.09
per cent) and state (27.48 per cent) levels.
The long history of mining has attracted
a large number of people to this region.
Next to Calcutta city it is the most urbanised
region of West Bengal. Such a high den-
sity of population poses a serious threat
of subsidence in the case of underground
mines and limits the scope of open-pit
mines.
The 19 open-cast mines in the Raniganj
belt are environmentally hazardous.
Moreover, the average residual life of each
such mine is as low as 2.1 years. These
mines together employ about 12,207
people. The reason for the short life spans
of open-cast mines in the belt is the fact
that these mines are on outcrops and patches
of the topmost seams in the area. Since
heavy earth moving machinery has to be
shifted frequently and since neither staff
2953
nor equipment can be deployed on a
permanent or a cost-efficient basis, these
mines are bound to be of an ephemeral
nature. The ICICI report says: “In order
to fully exploit the economic benefits
within the leasehold area, exploitation of
these patches may be important. However,
such operations can be undertaken more
economically on a contractual basis.” ECL
seems to have taken its cue from this point.
The costs of operating a mine fall under
several heads: wages, power, timber,
petroleum, oil and lubricants (POL), ex-
plosives and stowing. In the Raniganj belt
there is a heavy burden of wage cost, as
is evident from Table 1.
IMPROVING PRODUCTIVITY
Let us now see what measures ECL has
adopted so far to initiate a turnaround:
(1) The adoption of an exercise in which
the manpower requirement of each mine
has been assessed and 12,580 workers
have been identified as ‘surplus’.
(2) The introduction of a voluntary
retirement scheme (VRS) under which an
employee who has completed 10 years of
service or 40 years of age is given a ‘golden
handshake’.
The VRS has not been every successful.
This is mainly because alternative avenues
of employment in the region have been
more or less destroyed. Traditional agri-
culture and forest-based activities have
decayed to an alarming extent. Moreover,
a sizeable number of ECL employees are
migrant workers who have no attachment
to agriculture. The indigenous labourer
has lost his connection with the local eco-
system due to the degradation of environ-
mental resources.
The large manufacturing sector of the
region – steel plants, locomotive works,
etc – is oversaturated and throws up few
employment opportunities. Several me-
dium-sized units, such as the paper mill
in Raniganj and the Sen-Raleigh factory,
have closed down in the last couple of
decades, further restricting the job market
in the modern sector.
Why are so many workers considered
‘surplus’? Unskilled labourers are em-
ployed in eastern India collieries, and by
the time they develop some level of oc-
cupational skill (ordinarily in 10 to 12
years), their health deteriorates to such an
extent that they become redundant labour.
Rapid deterioration of workers’ health is
also related to poor conditions in the
working environment, and ECL has so far
not initiated any organised enquiry into
this matter. Besides being considered
‘surplus’ on health grounds, a worker may
come under that category when the spe-
2954
cific skills acquired by him become redun-
dant due to the introduction of new tech-
nology.
Finally, ECL considers a large number
of women workers ‘surplus’. It has in-
creasingly shown a gender bias. Many of
the women workers were originally em-
ployed on their own merit. But such cases
of direct employment of women are be-
coming rare, and ECL now actively dis-
courages employment of women even on
compassionate grounds – as when a male
member of the family dies while working
for the company.
Mechanisation has been initiated parti-
cularly in the OCPs. A high degree of
mechanisation is not possible in older under-
ground mines as the cost of production
would far exceed the sales realisation.
Much of the mechanisation technology
that ECL employs was imported from coal-
producing developed countries. Total
dependence on imported technology has
not been quite successful in ECL, where
the strata conditions are different from
those existing in the advanced countries.
Kottadih, for example, was a flagship
project of ECL assisted by French tech-
nology of underground longwall powered-
support operation. In this kind of opera-
tion, six to eight huge steel pillars hold
the roof while giant shearers raze the coal
seams, and the entire process is controlled
from the surface by computers. Three
factors are of great importance while
considering the selection of such techno-
logy: the nature (thickness and weight) of
the overburden, the nature of the surface
land use – as the land is allowed to subside
after mining, displacement of communi-
ties and loss of cultivable land is inevi-
table – and the number of steel pillars
which support the roof. On April 4, 1997,
the roof of the mine collapsed over a
stretch of about 5,600 feet, killing three
people and injuring six others, and de-
stroying machinery worth millions of
rupees. The project is dead for the time
being.
Another factor to rekon with is that the
use of cutting and loading machines in
underground mines using longwall tech-
nology generates enormous amounts of
dust and noise, which pollutes the mine
environment and poses safety and health
hazards.
Lastly, some technologies are indivis-
ible and hence may create other problems
in turn. For example, in an open-cast mine
there may be an 8-foot-thick layer of coal
on top and a 20-foot-thick layer at a lower
level. In Sangramgarh (Samdi), this 8-foot
layer has been left out, and mechanised
operations have begun to exploit the lower
Economic and Political Weekly
layer, which is better suited for heavy
machines. The exposed layer near the
ground surface has attracted the local
people, who have excavated coal illegally
and left honeycomb-like holes. Both
operations go on simultaneously.
Moreover, unauthorised mining goes on
under the nose of the company in several
other places of the region, and little has
been done to solve the problem so far
besides some exchanges of letters between
ECL and district administrators. As for
pilferage of coal from ECL collieries, it
has gone so far that exports to nearby
countries like Bangladesh and Nepal have
been severely affected.
From Durgapur to the Barakar township
there is no retail coal outlet for the do-
mestic consumers in the region. The
company expects the district administra-
tion to protect its property, and itself does
little to control unlawful activities in spite
of maintaining a large retinue of security
guards. Stricter policing by the company
could have solved many much problems.
Also, a combination of indigenously
available technologies rather than imported
technology could have been the answer
in a case like Sangramgarh.
SOME NEGLECTED REALITIES
Having considered the nature of the
problems of ECL and their background,
more specifically in relation to the 64
collieries proposed to be closed down, let
us now go back to the ICICI report. The
corporation has divided the 15 mining
areas under ECL into four groups based
on their 1997-98 economic performance.
Group I:- profit-making, high-capacity
open-cast mines: Raj Mahal, Sonepur
Bazari and Santhal Pargana areas.
Group II:- areas with profit-earning po-
tential: Kajora, Bankola, Kenda and
Kunustoria areas.
Group III:- high-capacity, longwall mines:
Jhanjra and Kottadih areas.
Group IV:- mines with difficult work-
ing conditions (64): Satgram, Sripur,
Salanpur, Sodepur, Mugma, and Panda-
veswar areas.
TABLE 1: COSTS OF MINES UNDER ECL
(Per cent of sale value)
Underground Open-Cast
Wages 102.51 17.17
Power 17.22 3.51
Stores 7.93 14.44
Transport 2.64 1.80
Administrative exp 7.07 4.81
Miscellaneous exp 9.17 5.64
Interest exp 5.22 7.82
Depreciation 10.20 16.27
Total 161.96 71.27
October 9, 1999
 This classification was done on the basis
of two indices: a ‘competitive index’ (profit
margins before interest and depreciation
divided by profit margins after interest
and depreciation), and ‘attractiveness
index’ (assessed capacity per employee
per year divided by production value per
employee). The report does not explain
why these indices were preferred.
The cost structures of the loss-making
mines vary. The highest losses are made
by the Sripur mine followed by Ningah,
Nutandanga, Temehani, New Kenda,
Kalipahara, Konardihi, Ratibati-R, and
Chinakuri 1. To produce 9,16,920 tonnes
of coal, the percentage shares of costs in
these mines is as follows: wages 66.08 per
cent, explosives 1.2 per cent, timber 0.84
per cent, POL 0.4 per cent, others 3.5 per
cent and sand stowing 27.93 per cent.
The stowing of sand in the underground
mines is apparently the second largest
head of expenditure. There is, however,
no way to check whether or not the amount
of sand claimed to have been stowed in
underground collieries has actually been
stowed. Some incidents of subsidence in
and around recent workings have alleg-
edly been due to negligence in filling up
underground cavities. Table 2 extracted
from ECL and JK Ropeways data sources
clearly shows the discrepancy between
the amounts of coal raised and the amounts
of sand stowed.
Apparently, more sand has been stowed
than coal raised; the data reveals that the
entire business of sand stowing in under-
ground trenches is a farce, an eyewash of
the grossest nature, and reveals the hypo-
critical attitude of ECL to environmental
concerns. The sand stowing business
benefits neither the region nor the under-
ground collieries. But it makes the ‘con-
tractor raj’ powerful. However, what
happens is that the underground mines
‘apparently’ lose economic viability in
terms of purely financial cost-benefit
analysis because of this added cost of sand
stowing in underground mines. The ICICI
report completely ignores this aspect.
ECL’s claims of adequately stowing the
underground voids have to be taken with
a pinch of salt in view also of the fact that
whereas a pre-nationalisation report iden-
tified 22 areas as ‘unsafe’, a 1997 report
of the Director General of Mines Safety
(DGMS) has marked 171 areas as unstable
and unsafe for human habitation. A physi-
cal survey of these areas would help
establish how many of them are post-
nationalisation workings.
Taking the logic a little further, if even
a semblance of the environmental care and
the protective measures of land reclama-
Economic and Political Weekly October 9, 1999
tion and rehabilitation that are followed tution, a state can charge cess on the
in other coal-producing countries were land being used for mining. Moreover,
taken up in eastern Indian open-cast mines, according to the Mines and Minerals Regu-
instead of leaving gaping holes and huge lation Act, a state that owns a coal belt
overburden dumps, the profitability of is entitled to royalty. Coal cess, almost like
OCPs is bound to be lower. Since there direct tax, is calculated as part of the
is no effective environmental planning annual value of the land where a mine is
and supervision in the true sense of the located.
terms, the OCPs can get away with the The revenue thus earned from cess,
holes and dumps just as the underground according to the West Bengal govern-
mines are sealed without being properly ment, is spent on employment generation
filled. This author’s contention here is that and welfare, and also on paying for the
the relative profitability of OCPs is only coal purchased. The burden is in fact passed
‘apparent’. Once the long-term environ- on to the consumers. The state earned
mental and social costs – Sonepur Bazari Rs 610.05 crore in 1997-98. However, the
and Kottadih have caused large-scale state government is yet to receive over
displacements of local populations – are Rs 1,000 crore on account of cess from
taken into consideration, the open-cast the central government. Even the provi-
mines too would not come across as ter- dent fund dues of the employees have not
ribly ‘attractive’. been paid.
Finally, any decision to close down After the hue and cry over the CIL’s
underground mines will also have to be decision to close down mines, the state
placed in a futuristic perspective. Mining government, however, reduced the coal
operations would compulsorily turn to cess to 25 per cent, acknowledging a
deeper horizons because of the exhaustion loss of Rs 250 crore to the state exche-
within two decades of deposits that are quer. Yet the amount remains higher than
shallow and comparatively easy to mine. the average royalty of 17 per cent levied
Underground mining, therefore, is the by other states, and hence ECL coal remains
inevitable future of the coal industry. the costliest in the country. So far, even
Handing over these mines to private the state government has not thought of
operators on the ground that they are ploughing the incomes from cess into
‘uneconomic’ would be an extremely hasty the region through innovative planning
decision. measures.
The grossest flaw in the ICICI report is
STATE GOVERNMENT CESS that it is cast on purely economic terms
The reasons for the chronic sickness of with the hidden assumption that better
ECL are several, the most important of technological inputs will result in improved
them being the coal cess imposed by the economic performance. At one point of
West Bengal government. Whereas in other the report, the ICICI does say that from
states only a royalty is imposed on coal, the ‘socio-economic perspective’, it is ‘not
and that amounts to an average of Rs 135 advisable to close down the mines under
per tonne, the West Bengal government group IV category’. But there is nothing
imposed a cess of 47.5 per cent ad valorem more on this topic as if the fate of nearly
on coal produced in the state. According 72,000 people does not matter. Contrast
to entry 49 in the state list in the Consti- this with the scene in Germany. That
TABLE 2: DIFFERENCE BETWEEN SAND STOWED AND COAL EXTRACTED
(Tonnes)
Area April 1995-November 1995 Difference April 1996-November 1996 Difference
Sand Coal Sand Over Sand Coal Sand Over
Stowed Raised Coal Stowed Raised Coal
East Division
Kunustoria 15,30,173.7 3,48,821 11,81,352.7 15,46,749.6 3,53,507 11,93,242.6
Kajora 7,98,342.6 2,00,523 5,97,819.6 9,70,899.6 2,09,084 7,61,815.6
Kenda 3,00,105.3 44,667 2,55,438.3 3,17,219.1 49,370 2,67,849.1
Bankola 9,22,102.5 1,93,080 7,29,022.5 1,109,559 2,31,311 8,78,248
Pandaveswar 8,41,051.2 1,94,014 6,47,037.2 11,51,244.6 2,39,769 9,11,475.6
Total (ED) 43,91,775.3 9,81,105 34,10,670.3 50,95,671.9 10,83,041 40,12,630.9
West Division
Sodepur 5,00,379 1,38,253 3,62,126 6,18,380.4 1,47,216 4,71,164.4
Sripur 4,98,319.8 87,966 4,10,353.8 4,60,623.9 92,863 3,67,760.9
Satgram 13,10,238.6 2,67,004 10,43,234.6 10,91,887.5 2,60,233 8,31,654.5
Total (WD) 23,08,937.4 4,93,223 18,15,714.4 21,70,891.8 5,00,312 16,70,579.8
Total (ECL) 67,00,712.7 14,74,328 52,26,384.7 72,66,563.7 15,83,353 56,83,210.7
Source: J K Ropeways and ECL
2955
country’s coal production meets only 20
per cent of its total demand. Still, coal
mining gets a state subsidy of more than
6 billion marks in the face of popular
demand.
The ICICI report is full of such sweep-
ing statements as: “The predominance of
labour-intensive underground mining
operations, coupled with the resultant low
productivity, is clearly reflected in the low
profitability of the operations at ECL”.
The report shows incomplete comprehen-
sion of both the problems it has set out
to solve and the snow-balling effects that
would be triggered by adopting the strat-
egies suggested by it.
As an afterthought, the report mentions
that the “option of phasing out these mines
would not be practical from the implemen-
tation point of view”. What does this
signify?
It would seem that ECL is fascinated
with machines and entirely impatient with
human beings. Its apparent approach is to
do away with people whether by displac-
ing them in mining expansion, or by
sacking them en masse, in an attempt to
attain economic efficiency. This attitude
does not sit comfortably with a public
sector company. It makes even a layman
suspect that ECL intends to dismantle
itself.
In the wake of liberalisation, there have
been subtle and not-so-subtle attempts from
various quarters to attract private capital
from within India and abroad to the coal
mining sector. The ICICI report, instead
of honestly delineating a plan of re-
structuring and revival, has acted as an
instrument for the justification of mine
closures. The coal industry itself is under-
going a restructuring and that CIL’s
priorities lie elsewhere is borne out by
the fact that it is importing 25 million
tonnes of non-coking coal from various
countries like Australia, Indonesia and
South Africa – another hasty and unnec-
essary measure.
TODAY AND TOMORROW
Recent developments are quite intrigu-
ing. For one thing, ECL shelved its inten-
tions of mine closure and retrenchment for
a while to work on a revival plan to
prescribe a turnaround package for the
company. Retrenchment was ruled out for
the time being. However, since over
Rs 4,000 million has been already in-
vested in ECL since nationalisation in
1972-73, the question of any further capi-
tal infusion does not seem a possibility.
All major trade unions in ECL and the
Coal Mines Officers’ Association, India
(CMOA) have hailed the decision, but
2956
the closure of some nonviable mines, most
of them in West Bengal, is inevitable.
Even with a popularised VRS, the impact
on the economy of the Raniganj belt will
be hard.
Over a recent span of a few months,
moreover, the productivity of ECL in-
creased to the tune of 19 per cent – an
unprecedented event for this company.
This has been made possible through
improved motivation at all levels – from
the general ‘majdoor’ to the general
manager – and the trade unions as well
as the officers’ union have played a sig-
nificant role in this turnaround. This alone
is evidence enough that what has been
lacking so far is proper motivation and
human resource development, areas that
have never been taken seriously by the
ECL and CIL bosses.
The entire chapter has shaken the very
core of the existence of the Raniganj belt
– one of the better-off areas of West Bengal.
It has brought into focus the old problem
of non-performance of the state sector and
highlights several facets – some specific
to the Indian coal mining industry and
some specific to the region. In recent years,
liberalisation of the economy has been
viewed as a panacea, sometimes even at
the cost of the national interest. It seems
that the coal sector is all set to open up
to foreign private capital since ECL is
unable to find a solution to its problems
– created largely by itself.
The ICICI report, looking only at the
economics of coal mining, has intention-
ally or unintentionally fallen in line with
the scheme of things at quite the right time.
An example: nowhere has the report
mentioned the cumulative loss to ECL
from the underground void-subsidence-
compensation cycle, leave alone measure
it, thus creating the impression that clos-
ing the underground mines would be the
final solution.
In its 25 years or so of existence, ECL
has never thought of setting up its own
research and development (R and D)
establishment. It has at all times been
lured by the hi-tech sophistication of
coal mining in other countries. The results
have often been disastrous. Machinery
has been left unused, rusted machines
have failed to perform, millions of rupees
have gone down the drain. Unauthorised,
informal coal mining is rampant in the
region, and often goes on right under
the nose of the mining authority. Sealed
and abandoned collieries are broken open
and coal from pillars and sidewalls is
extracted without resort to sand filling. In
open-cast mines too theft has become a
fact of life.
Economic and Political Weekly
The basic problem is that ECL has never
tried to set its priorities right and never
looked beyond immediate economic con-
cerns. The environmental problems of the
region, as a result, have reached crisis
levels. On winter evenings, hundreds of
thousands of knee-high stacks of stolen
coal go up in flames along the streets and
in residential yards. The smoke floats at
eye level – as it is unable to rise against
the heavy air – making a visitor to the area
wonder how a human being can breathe
such air. The dispossessed peasants take
to ‘illegal’ mining. The mafia is more
involved in illegal coal trade.
Thus, there are intricate environmental
and human dimensions of the problems of
the region, and a simple cost-benefit
analysis is not adequate at all. Another
grey area that ECL has overlooked is that
human productivity is low because of lack
of skills and poor health. Building up
human resource potential has never been
one of the company’s strong points. The
stress on open-cast mines at the cost of
underground ones also needs closer ex-
amination. How far is the viability of open-
cast projects real and how far only appar-
ent because adequate measures of envi-
ronmental protection are side-tracked?
Finally, this whole chapter has once again
brought out of the closet some old issues:
the question of a state’s right to earn
revenue on its natural resources, coal
pricing policy, etc.
Given a scenario of foreign private
companies operating in the region, one
can only try to visualise the shape of things
to come in a limited way. There is no doubt
that state policing to protect the environ-
ment and the rights of disadvantaged
groups would have to be at a very high
level. Given the state of Indian corruption
any hope for such a state of affairs would
be illusory. And given India’s dismal track
record in managing environmental matters
through state initiative, one shudders to
think what these private/foreign companies
would do once they enter the coal mining
regions. Many old inhabitants of the region
have not forgotten the days of ‘company
raj’, when the main objective of the small
entrepreneurs was ‘more hole, more coal’.
ECL has proved no different from its
predecessors with regard to environmen-
tal matters. Instead of trying to clean up
its act, it now wishes to liquidate itself and
hand the region over to a new breed of
profit-seekers. While transnational min-
ing companies, forced by governments,
follow very strict environmental guide-
lines on their home turfs, there is no
guarantee that they would do so in India
too. Remember Bhopal?
October 9, 1999