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Coal India plans Rs 10,000-crore joint venture with GAIL India, RCF, FCIL

According to reports, Coal India is planning a Rs 10,000-crore joint venture along with GAIL India, Rashtriya Chemicals & Fertilizers (RCF) and The Fertilizer Corporation of India (FCIL) to set up a urea and ammonium nitrate chemicals complex that will run on gasified coal.

Coal India has appointed Projects and Development India ( PDIL) to conduct a feasibility study on the project. The plan is to use around 6 million tonnes of coal from coalfields at Talcher in Odisha and manufacture about 3 lakh tonnes of urea annually and around 300-400 tonnes of ammonium nitrate per day.

Ammonium nitrate is the principal ingredient for making explosives used as blasting material at coal mines. The country is facing a crunch in the supply of ammonium nitrate and explosive suppliers often jack up prices, resulting in higher input costs for the company.

GAIL will be responsible for sourcing, from global suppliers, the technology for manufacturing ammonium nitrate and urea using gasified coal. The complex will come up at Fertilizer Corporation’s land at Talcher, which houses a shut fertiliser plant.

“There would be two joint ventures. The first will be with Gail for coal-gasifying technology which would be brought by GAIL. In this venture, GAIL is slated to be the major partner, with CIL holding a non-majority stake,” a Coal India official said.

“The second joint venture will be with FCIL, RCF, where CIL is likely to hold a majority stake. This company will use the gasified coal to manufacture ammonium nitrate and urea.” Urea and ammonium nitrate manufacturing involves similar processes and the plan of the companies fits with that of the new government, which intends to reduce imports of urea.

Existing fertiliser plants in the country are nearly dead because of high natural gas prices. Manufacturing of urea through the coal gasification method, according to experts from CIL, is a viable alternative. Coal gasification converts coal, petroleum or biomass into carbon monoxide, hydrogen and oxygen.

The resulting gaseous mixture is synthesis gas or syngas, which can be used as a fuel, a source said. CIL has meanwhile sought shareholder’s approval for changing its article of association to include such products on its manufacturing list.

GAIL has already signed an initial agreement with RCF for using the gas produced by the Coal India-GAIL JV for manufacturing urea.

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