BEML Making Coal Mining “Green”
Underground mining is the future of coal mining, said Shantanu Roy, the Chairman & Managing Director (CMD) of BEML Limited in an interview with our Editor Subhajit Roy on the sidelines of IME 2023 in Kolkata. BEML Limited is a diversified company manufacturing and supplying products, services and support to Defence & Aerospace, Mining & Construction and Rail & Metro.
On a global scale, the mining equipment industry is facing challenges. How do you evaluate the current status of the Indian market in this context?
The mining sector is currently performing reasonably well. Global coal projections indicate a Compound Annual Growth Rate (CAGR) of approximately 8% compared to last year. From 2023 to 2027, it is expected to continue growing at a CAGR of 7%. While coal extraction remains ongoing, the importance of coal as an affordable fuel is unquestionable. Abruptly transitioning from coal to clean power is not feasible overnight. This is due to the necessity of coal providing the foundational power requirement until sufficient storage solutions are in place. Consequently, reliance on coal will persist.
In the Indian market, last year’s total coal production reached 893 million tons. This year, production is anticipated to surpass 1 million tons, with Coal India contributing about 78%. Over the next 2 to 3 years, the government’s focus on underground coal mining, backed by incentives for private developers and the Production-Linked Incentive (PLI) program, aims to fulfill the country’s coal demand of around 1.5 billion tons through indigenous production. Simultaneously, there is a growing emphasis on climate-smart mining practices.
Coal India is actively adopting eco-friendly mining technologies, particularly emphasizing underground mining. Presently, coal production from underground mines stands at around 25 million tons, with plans to increase it to 100 million tons by 2030. Underground mining is considered a sustainable solution for coal production as it avoids the displacement of people and deforestation. Balancing the continued presence of coal with reduced carbon footprints is a key focus area for the industry’s future.
In the context of green and sustainable mining and efforts to reduce carbon impact, have you introduced any new mining solutions?
We focus on three key areas for sustainable solutions. First, we have introduced 100-ton and 180-ton electric excavators. Second, in addressing emissions, we have developed an in-house CV Stage 4 engine for a 140-bore size and are working on meeting further engine requirements upgradable to CV Stage 4 and subsequently to BS6 norms. Third, in renewables, we currently operate a 23-megawatt wind generating unit and a small solar capacity. Together, these facilities cover 91% of our captive consumption with green energy, resulting in a yearly saving of around 24,000 tons.
Additionally, our contribution to carbon reduction extends to urban mobility solutions, including metro coaches and electric trains, leading to a yearly reduction of approximately 4.7 million tons. Looking ahead, we plan to establish a 10-megawatt wind generating unit and a 2-megawatt solar power plant to further align with our environmental sustainability commitments and ESG goals.
Having recently assumed the role of CMD at BEML, what objectives do you have in mind?
My objective is singular and clear: to achieve growth. Company growth, particularly in terms of revenue, will inherently lead to improvements in other financial aspects such as EBITDA, return on capital employed, and gross margins. The key focus is achieving a 20% Compound Annual Growth Rate (CAGR) year on year. This growth plan is based on three strategies: survive, revive, and thrive.
Surviving involves navigating through the current downtrend, overcoming the 7% dip in our top line experienced last year despite the industry’s overall double-digit growth. Reviving centers around reinforcing our core capacities and competencies. Once we consolidate these core competencies, the next step is to thrive on them. Simultaneously, we aim to diversify, both organically and potentially into new areas, as part of our strategic approach.
Can you provide specific details regarding the areas you are considering for diversification?
In our discussions about exploring new areas, one notable domain is our potential entry into underground mining. The future focus of mining companies will shift towards underground mining. Currently, we don’t operate in this segment, and uniquely, we are the sole PSU in heavy earthmoving for open-cast mining. No PSU is engaged in underground equipment manufacturing. To sustain our portfolio, diversifying into underground mining equipment is imperative. We are exploring strategies, including joint ventures, technology collaborations, or contract manufacturing.
In the rail segment, our attention is on aluminum cars, deemed as the future standard. In defense, our core capabilities lie in high mobility vehicles, armoring, engines, and bridging systems. We aim to broaden our scope by venturing into related areas such as future land systems and the development of engines and power packs for these systems.
In terms of growth, you mentioned that defense and railways are key drivers, and mining plays a role as well. What factors will primarily fuel growth during your tenure?
The primary factors driving growth include the railway and metro sectors, as well as the defense and aerospace sectors. Currently, mining constitutes approximately 50% of our top line. Looking ahead, over the next five years, I anticipate that mining will continue to contribute significantly, making up around 30% to 35% of our revenue, while the remaining 60% to 65% will be driven by the railway, metro, defense, and aerospace sectors.
WATCH this interview now.
