The Sasan ultra mega power project being developed by Reliance Power in Madhya Pradesh will supply power at the levelised tariff of R1.19 a unit, the lowest in India, as per the contract, when it starts generation by the end of the next year. The success of the project will critically depend on the private developer's ability to optimise coal production cost from the nearby captive mines–Moher, Moher Amlori extension and Chhatrasal—given that fuel accounts for about 80% of the power generation cost. In this context, the task of Russel Taylor, who is in charge of mining coal for the project, is cut out. In an interview with FE’s Noor Mohammad in Sasan recently, Taylor spells out his strategy to optimise coal production costs while meeting environmental concerns. Excerpts:
When does Reliance Power expect to start production from the captive coal mines in Sasan? What are the key milestones in the development work?
Reliance Power has started mine development work in Sasan. Contractors are working on the initial ‘removal of overburden.’ This will help the deployment of our own large sized, state-of-the-art, mining equipment at the mine faces. Many of these equipment have reached the project site and some are on the way from the US. We plan to start coal production in time to meet the coal needs of the first unit of Sasan power plant, scheduled for commissioning in January 2013.
A lot of things have to come together for starting coal production from a greenfield mine. For us, many of these milestones have been achieved, like environment & forest clearances, mining lease, etc. We expect that our own large sized equipment viz. rope shovels and dumpers, would start to work in December 2011. Work has also started on mine infrastructure and coal handling plant.
What challenges have you encountered in developing the blocks and how did you deal with them?
Like any greenfield mine we have faced challenges in Sasan and have been able to overcome them. Going forward, we would have to ensure the contractors and suppliers engaged for commissioning large mining equipment and developing the mine infrastructure deliver quality work while meeting the agreed schedule. The other major challenges would be to attract and retain the best talent to operate and maintain the equipment fleet, manage the mines, impart world-class training and inculcate a culture based on productivity. We believe that we have recruited the best mining team, which includes global experts, to achieve our objective of developing a leading world-class mine.
We have entered into a partnership with North American Coal Corporation (NACoal) for assistance in development, operation and maintenance of coal mines. NACoal, a subsidiary of NACCO Industries (a NYSE-listed company), mines and markets lignite coal primarily as fuel for power generation and is one of the top ten coal and lignite mining companies in the US.
What are the key features of the mining technology being used by Reliance Power in the blocks?
The choice of mining technology is influenced by the geo-mining conditions of the coal mine. We have proposed a combined system of draglines and shovel-dumper combination for overburden removal. Draglines are one of the most reliable mining equipment and provide the lowest cost of mining per cubic metre of overburden. Coal would be mined using large-sized, front-end loaders and dumpers. Many of these equipment are being used for the first time in India, but are extensively used by leading global mining companies like Peabody, Rio Tinto and BHP Billiton.
Reliance Power is in the process of implementing a state-of-the-art mine information management system. This will monitor equipment health in real time, minimise equipment idling, reduce human operational mistakes, and increase equipment capacity utilisation & equipment uptime. With proper training, we expect these systems to deliver 20-30% productivity improvement over the next two-three years
What will be your cost of coal production from Sasan mines?
We have paid a great deal of attention to equipment selection, which has been based on evaluating the total cost of ownership. In Sasan, we are utilising large-sized mining equipment, which would deliver competitive cost due to economies of scale. We would also be deploying latest systems and processes to deliver significant productivity improvements. We also have the advantage of lower manpower costs in India, compared to mining companies operating in the USA, Australia and South Africa. Considering all of the above, we expect that we would be able to deliver coal at a cost that enables Sasan UMPP to fulfill its promise of supplying power at a landmark tariff of R1.19 a unit to more than 35 crore Indians in seven states.
How does Reliance Power plan to address environmental concerns?
Protection and conservation of environment is one of our primary goals. We would have dedicated personnel for implementing and monitoring our environment and social management plans. Our plans deal with various aspects of environment protection such as land conservation and reclamation, air pollution, water pollution, noise pollution and ecological and social impacts. The top soil would be removed carefully during mining and preserved separately in a manner so as to protect its productivity for plantation and land reclamation purpose.
The ground water inflow into the mines will be channelised through garland drains into sedimentation tanks and then discharged into natural drains. This will preserve the ground water table of the mine area. Mine waste water would be treated and clean water would be discharged.
We are also implementing a comprehensive and purposeful rehabilitation plan approved by the government of Madhya Pradesh that aims to assist affected families and persons to not only regain but also improve their existing standard of living, earning capacity and production levels. The social initiatives taken up by us so far have already set a new benchmark in the country with strong commendations from many experts. Sasan UMPP has been registered as a green project with UNFCCC Executive Board to earn carbon credits and our mining will continue the green philosophy of the project forward.
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