KOLKATA (miningweekly.com) – India’s State-run NLC Limited (formerly Neyveli Lignite Corporation Limited) has tied up with Mineral Exploration Corporation Limited (MECL) to undertake greenfield exploration of lignite blocks in southern states, the predominant operational hinterland of NLC.

The tie-up comes close on the heels of a directive of the federal Coal Ministry that NLC should step up exploration of lignite reserves in southern India by adopting the outsourcing model, NLC officials said.

As per a memorandum of understanding signed between the two companies, detailed regional exploration would be conducted by MECL at the Pandiyur and R S Mangalam lignite blocks in Ramnad district in southern state of Tamil Nadu.

The Coal Ministry has approved regional exploration to start in the current financial year and will include total drilling of 48 000 m across Pandiyur block and 34 500 m across R S Mangalam block.

NLC reckons that the exploration initiative will yield significant viable lignite deposits and part of the company’s strategic plan is to commit capital expenditure to the tune of $18-billion by 2024/25, to ramp up its business portfolio comprising lignite mining in southern states, increase power generation capacities and undertake new renewal energy projects at mining sites.

The expected additional lignite resource would enable NLC to support its plans to acquire at least 3 000 MW of power projects and new lignite mines could act as fuel linkages to these planned power acquisitions, officials said.

NLC reckons that demand for lignite for steel production can take a quantum jump following its adoption of Australian technology for use of lignite in steel mills, reducing dependency on costly imported coking coal.

NLC, along with State-run Steel Authority of India Limited (SAIL), has tied up with Environmental Clean Technologies (ECT) to set up an Indian joint venture, aiming to use ECT’s proprietary Matmor technology for use of lignite in SAIL's steelmaking blast furnaces and subsequently promote its use by other domestic steel production.

ECT’s Matmor technology uses wet, low carbon lignite in place of coking coal for production of finished steel at one third the cost of coking coal, officials observed.