South West Pinnacle To Spend Rs 450 Crore On Coal Block, Says Chairman Vikas Jain

South West Pinnacle Exploration Ltd. will spend Rs 450 crore on its commercial coal block in Jharkhand, according to Chairman Vikas Jain, even as it scouts locations for potential non-conventional energy sources.

The company will invest Rs 250 crore through fiscal 2025 to develop the commercial coal mine it won in 2021 auctions, Jain, who is also the managing director, told BQ Prime. "Another Rs 200 crore will be invested from internal accruals after the mine goes into production."

"We expect all statutory approvals to come by fiscal 2025, after which production will start," he said.

The Indian government has given a lot of impetus to commercial coal mining in the last six months, including one-on-one interactions with industry players, Jain said. "They have also started single-window clearance for these blocks."

"At present, the government has allotted around 36 million ton of peak-rated capacity," he said. "We expect India to produce at least 5–6 million ton from commercial mines awarded till now. After the proposed 141 coal blocks are allocated, it is likely to exceed 100 million ton."

Finance Minister Nirmala Sitharaman on Nov. 3 launched the sixth tranche of the commercial coal mines auction, under which the government is offering 141 blocks across 11 states in the biggest auction so far for coal.

The company is also analysing other commercial coal blocks for acquisition but expects to gain more clarity once the Jharkhand coal block stabilises, Jain said.

The head of the coal miner and explorer of non-conventional energy resources expects coal production in India to grow to 1,400 million ton by 2030 on demand from the power sector. This will happen despite the focus on climate change and progress toward net zero emissions under the COP26 agreements, Jain said.

In the coming years, the company sees a lot of potential in non-conventional energy sources like geothermal coal and gas, coal bed methane, and shale gas.

There are two locations in Ladakh that have good potential for geothermal. The other locations that have geothermal resources are in Maharashtra and South India. However, the heat recovery in locations outside Ladakh is not good, Jain said.

The heat recovery in Ladakh is more than 80–85 degree celsius when it reaches the earth's surface, which is good for generating the steam required for the generation of electricity, according to Jain. But the heat recovery in South India is not good, as the heat inside the earth is at 80 degree which further drops by the time it comes to the surface and thus does not help in the creation of steam, he said. 

"We are analysing various locations not just for geothermal but also for CBM and shale, though they are still at their initial stages," he said.

South West Pinnacle has two verticals in Oman. One is drilling, where they have deployed two mineral exploration rigs for limestone mining. The second is an 11-year long-term services contract for the mining of copper. The second vertical is in partnership with a local firm where the company holds a 35% stake. "The expected revenue from the services contract is around Rs 35 crore per annum. 

There will be a lot of thrust on the exploration business in the coming years. We expect to see a 20% CAGR in this business. Besides, there will be continued growth in the coal business. There are around 500 non-coal blocks (rare earth metals) that will be on offer in the coming years. "We are also looking to acquire one non-coal block," Jain said.

India’s exploration budget is way behind compared to other developed countries. "We have a long way to go. However, our company is well positioned to meet the challenge in the oil and gas and mineral exploration sectors, both coal and non-coal.

In the overseas market, Oman, Saudi Arabia, and Jordan are opening up their non-oil mineral sectors for auctions, which will be a good opportunity for an explorer like South West Pinnacle Exploration, he said.