Real aim behind coal privatisation

When profitability of coal mining was low, state monopoly was established
Now when profitability is high, privatisation is being pursued

Coal mining is today an extremely profitable industry in India. It has been estimated that there will be an ever increasing demand for coal by different branches of industry.

Metallurgical coal (Coking coal) is necessary to run the steel plants. Non coking coal is used by coal-based power plants and by the aluminum, cement and fertilizer industries.

Coal-based power currently accounts for 72% of electricity generation. Despite the Indian state’s plan to develop renewable sources of energy, coal based thermal power plants will remain the major source of energy over the next two decades.

India’s total coal consumption is expected to double in absolute terms by 2040 as compared with 2017. This will be the case despite the share of coal in terms of primary energy consumption falling from 56% in 2017 to 48% in 2040.

There is competition amongst various capitalist monopolies in coal-based industries to establish control over coal production and distribution, both to ensure a steady supply of coal for their needs through vertical integration and to use domination over coal production to squeeze their rivals.

Coal India Limited (CIL) is a profit making state-owned Navratna Company which has a monopoly over coal production and sale at the present time. The Tatas, Ambanis, Birlas and other capitalist monopolies are united in their view that coal production and distribution must be privatized. The central government is working to advance the interests of these capitalist monopolies. The liquidation of CIL is central to this plan.

Coal mining in India as a capitalist enterprise began with the establishment of the Raniganj coal mines in Bengal. The development of the railways gave a big boost to coal mining. The rapid growth of industry during the First World War and afterwards led to increased demand for coal.

In the initial years after independence, there were hundreds of private coal mines operating in Eastern and Central India. Coal mining was characterised by low level of mechanisation. In 1951, around 70 per cent of all mines did not use electrical power. Only around 18 per cent of the underground mines operated coal cutting machines and less than 1 per cent of the coal was mechanically loaded.

Between 1951 and 1971, the level of mechanization and productivity increased, largely due to investments undertaken by the state. The state invested in many larger, privately owned mines supported by a World Bank loan. Output levels rose from around 30 Mt after the Second World War to about 72 Mt in 1971.

During the 1960s, profitability of private coal mines declined due to a number of factors.  Government policy kept the selling price low to benefit coal based industry. Limited capacity of rail transportation led to accumulation of coal at the pit head. Profits as a percentage of the value of coal sold fell from 8.4 percent to 5.5 percent, while this ratio for capitalist industry as a whole remained around 10 percent throughout that decade.  In such conditions, coal mine owners were not willing to invest in mining to meet the growing demand for coal.

State monopoly over coal mining was established at the behest of the biggest capitalist monopolies of that time. It was done in order to ensure that cheap and assured supply of coal was guaranteed for the coal based steel, power, aluminum, fertilizer and cement plants — both state owned and privately owned.

The Coking Coal Mines (Nationalisation) 1972 Act brought over 200 coal mines producing coking coal under state ownership. The Coal Mines (Nationalisation) Act, 1973 brought non-coking coal mines under state ownership.

The Nationalization Acts listed the names of mines and the amount of monies to be given as compensation to its former private owners. Coal India Limited was established in 1975, fully owned by the Central Government. Coal production increased rapidly in the years that followed.

The 1972 Act was amended almost immediately to permit steel plants, including the privately owned Tata Iron and Steel Company (TISCO), to retain ownership of their captive mines, which supplied coking coal for their own use.

Since the 1990s, capitalist monopolies began investing in a big way in steel, power, aluminum and other coal based plants. The 1973 Act ensuring state monopoly ownership over non coking coal mines was amended in 1992 to permit capitalists to own non coking coal mines for their own use. Between 1992 and 2010, and particularly after 2003, coal blocks were handed over to capitalists at throwaway prices. However, the contradictions amongst the capitalist monopolies over the coal allocation resulted in a major scandal. The Supreme Court cancelled the allocations in 2014. Following this, the Narendra Modi government repealed the 1972 and 1973 acts. Indian and foreign capitalists can now own coal mines as well as market the coal.

Coal India Limited is today one of the most profitable companies in the country.  Its net worth was Rs. 16,800 crore as on 31st March, 2020.  With after-tax profit of Rs. 11,300 crore in 2019-20, it earned a return of 67 percent on its assets.

The auction of coal mines by the government to private bidders, Indian and foreign, reflects the greed of monopoly capitalists to grab the huge profits accruing to CIL.

Coal workers of India, who are opposing the moves towards privatisation, have waged many heroic battles over the past century.  It is in the best interests of the working class and of society as a whole that the precious coal resources of our country are placed under social control, so that they can be scientifically developed and utilized for the benefit of society.

The capitalist class headed by the monopolies has shown that it has no concern for the society or the natural environment. It is solely motivated by its desire to fulfill its greed for maximum profits.

The struggle of coal workers against privatization is a struggle in the general interests of society. It deserves the support of the entire working class.

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