Coal India inks joint venture agreement with BHEL for ammonium nitrate plant in Odisha

State-owned Coal India Limited on Wednesday announced signing a joint venture agreement with Bharat Heavy Electricals Limited (BHEL) to set up an ammonium nitrate plant through the surface coal gasification (SCG) technology route.

The proposed plant in the Lakhanpur area of Mahanadi Coalfields Limited, Odisha, is planned to have an initial production capacity of 2,000 tonnes per day. The equity shareholding of the joint venture company (JVC), a private limited entity, will be split in a 51:49 ratio, with Coal India being the majority stakeholder.

The initial paid-up capital of this company will be ₹1 lakh and the registered office will be located in Odisha.

The board of the JVC will have six directors, three each to be nominated by BHEL and CIL, respectively.

The JVC plant’s annual production capacity is projected at 6.60 Lakh tons which will require 1.3 million tonnes (MTs) of coal. As part of the agreement, CIL will supply coal while BHEL will deploy its indigenously developed pressurized fluidized bed gasification (PFBG) technology in the process.

The partnership between the two PSUs is in line with the National Coal Gasification Mission which calls for the utilisation of the chemical properties of coal.

Ammonium nitrate is a major ingredient used in manufacturing explosives used by CIL in its OC mining operations, a major source of its coal production. As a backward integration project, the upcoming factory will assist CIL in securing raw materials and reducing dependency on imports for ammonium nitrate.

"CIL to ensure offtake of at least 75% of rated annual production capacity of the Project, envisaged in the Pre-Feasibility Report (PFR), subject to acceptance of quality and prices on mutually acceptable terms, as agreed after finalisation of DFR," the company said in an exchange filing.

Projects and Development India Limited has been tasked to prepare a detailed feasibility report of the proposed plant.

In the early trading session, shares of Coal India are trading margially up (+0.3%), while share price of BHEL is lower by (-1%).