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Government's coal efficiency drive risks ire of powerful unions

Plans by India's coal monopoly to buy billions of dollars of new machinery and outsource work are facing resistance from powerful unions worried about job losses, in a potential blow to Prime Minister Narendra Modi's promise to bring electricity to all.

twitter-logoReuters | May 3, 2016 | Updated 12:16 IST
Photo: Reuters

Plans by country's coal monopoly to buy billions of dollars of new machinery and outsource work are facing resistance from powerful unions worried about job losses, in a potential blow to Prime Minister Narendra Modi's promise to bring electricity to all.

State-run Coal India Ltd, the world's biggest coal miner, has already doubled output growth since Modi came to power two years ago, owing to the removal of hurdles to production like environmental clearances and land acquisition.

The increase turned coal shortages at India's power plants to oversupply, making it one of the administration's biggest successes.

The next phase of restructuring the notoriously inefficient behemoth is likely to be harder, however, and is crucial to the government's ambition to sell 10 per cent of the $27 billion company to raise funds for further growth and investment.

New Delhi also wants to double annual output to 1 billion tonnes by 2019/20 to meet future demand, and to do that it must radically increase productivity.

Coal India's output-per-man shift is estimated at one-eighth of Peabody Energy Corp, the world's largest private coal producer that recently filed for bankruptcy protection.

Already, labour unions, with a history of hostility towards management, are pushing back on Coal India's plans, fearing modernization and outsourcing will hit jobs, said leaders of two unions that cover a majority of the company's 371,000 employees.

Strikes, sometimes every few months, have disrupted output, although under Modi the unions have been more cooperative.

"High-tech mining will mean fewer job opportunities for labourers and no job guarantee for existing employees," said Baij Nath Rai, president of Bharatiya Mazdoor Sangh (BMS), which says it represents 100,000 Coal India employees and contractors.

"We strongly protest this, and have already taken up the issue with the government. They will not dare do anything if there is a strong protest."

The BMS's view is likely to carry extra weight, as it is loosely affiliated with the Rashtriya Swayamsevak Sangh (RSS), which is the ideological parent of Modi's Bharatiya Janata Party (BJP).


Rai said Piyush Goyal, minister for power, coal and renewable energy, had been trying to convince unions to play along with the reforms.

Early last year, the unions planned a strike to protest against moves to open up the coal sector to private firms and sell a 10 per cent stake.

But they called off a five-day stoppage on its second day after Goyal formed a committee to look into their concerns so that they "do not have to go on strike again".

Coal India officials also say they constantly talk to workers on various issues, but union leaders, including BMS's Rai, said they would resist any move deemed "anti-labourer".

"The government is doing this slowly, so that there is not much protest all of a sudden," said D.D. Ramanandan of the All India Coal Workers Federation, which says it represents more than 100,000 Coal India employees and contractors.

"We have consistently opposed this policy and will sit together with all the unions to decide the future course of action," Ramanandan said. Federal Coal Secretary Anil Swarup and several senior Coal India officials said the company planned to push ahead.

It wants to spend billions of dollars over the next few years, including around $1.3 billion this year, to buy equipment and expand mines, where workers often use shovels and picks to dig for coal underground, one of the officials said.

The company also plans to stop filling most vacancies arising from retirements over the next three years, and outsource more mining to private companies, the officials added.

"Outsourcing helps in more ways than one," Swarup told Reuters. "If they bring in efficient technology, because they are paid for that, it will make the people in Coal India understand they too can become more efficient."

The government's production and productivity plans have drawn support from the London-based World Coal Association, a trade group of coal producers and mining equipment makers.

Coal India's equipment orders, some already placed, are a bright spot for machinery makers such as U.S. firm Caterpillar, Japan's Komatsu and India's Larsen & Toubro, at a time when most miners are scaling back production amid a global supply glut.

Coal India unit Mahanadi Coalfields pioneered outsourcing of mining work a few years ago and is now the company's biggest producer and fastest growing unit.

Deepak Srivastava, Mahanadi's chief vigilance officer, said around 90 per cent of the unit's mining work is done by contractors who have performed better than in-house miners.

The ratio is much lower for other Coal India units but will increase, he added.

Swarup, who has overseen an overhaul of Coal India's anti-theft and monitoring systems this year, said he hoped the push for efficiency and extensive use of machines would help attract investors if the government were to sell a stake.

"We keep doing our job in terms of increasing production and productivity and improving quality," Swarup said. "Our assumption is that once you do that shareholders would be interested."

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