Coal India Signs Joint Venture Agreement with BHEL to Develop USD 1.4 Billion Ammonium Nitrate Plant

Coal India Limited and Bharat Heavy Electricals signed a joint venture agreement (JVA) to establish a USD 1.4 billion ammonium nitrate production facility in Odisha. The ammonium nitrate plant will be established in the Lakhanpur area of Mahanadi Coalfields Limited, Odisha. Furthermore, in this joint venture, Coal India will own a 51 percent stake and BHEL will acquire the remaining 49 percent.

Leveraging surface coal gasification (SCG) technology, the plant is initially projected to produce 2,000 tons of ammonium nitrate daily. The annual production target is a substantial 6.60 lakh tons. To support this production, CIL will supply approximately 1.3 million metric tons of coal annually.

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 CIL will supply the coal. BHEL would bring indigenously developed pressurized fluidized bed gasification (PFBG) technology to the table for this purpose. The synergy and partnership of the two corporate giants is a big step towards the National Coal Gasification Mission, which facilitates the utilization of the chemical properties of coal.

The joint venture agreement has received strong backing from the Indian government.  Amrit Lal Meena, Secretary of the Ministry of Coal, expressed optimism about the project, stating, “Gasification is the highest priority area for the Ministry of Coal. In the next two to three years, there will be sufficient coal."

This project will bolster India's domestic production capacity for ammonium nitrate, reducing dependence on imports and strengthening domestic supply chains.

Objectives of the Joint Venture

This venture marks the first step for both companies into the coal-to-chemicals sector in India. The initial focus will be on establishing a foothold in this growing market through the production of ammonium nitrate.

The project aims to increase domestic production of ammonium nitrate, which is currently imported in significant quantities. This will contribute to India's "Atmanirbhar Bharat" (self-reliant India) initiative by reducing dependence on foreign supplies.

The project utilizes BHEL's indigenously developed Pressurized Fluidized Bed Gasification (PFBG) technology. This promotes self-reliance in critical technology areas and strengthens domestic expertise in coal gasification.

Background of CIL and BHEL

Coal India Limited

Established in 1973 as a state-owned enterprise under the Ministry of Coal, Government of India. CIL is the largest coal producer in the world by volume, accounting for over 80% of India's domestic coal production. Operates through seven subsidiary companies spread across different coalfields in India. Primarily involved in mining and supplying coal for various purposes, including power generation, steel production, and cement manufacturing.

Bharat Heavy Electricals Limited 

BHEL was established in 1963 as a state-owned enterprise under the Ministry of Heavy Industries, Government of India. Classified as a "Maharatna" public sector undertaking (PSU), signifying its status as a leading and financially strong state-owned company. 

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