July 25, 2008

CIL in talks with GAIL and RCF for ammonium nitrate unit

ET reported that, in a bid to bridge the gap in supplies of mining explosives, Coal India Limited has entered into talks with GAIL for roping in Rashtriya Chemicals & Fertilizers to manufacture ammonium nitrate.

Mr Partha Bhattacharyya chairman of CIL said that it is now decided to modify the existing two arrangements among the three companies so that manufacture of urea can be incorporated in the existing agreements. He added that "CIL, GAIL and RCF have agreed in principle, but a formal agreement is likely to come through shortly."

CIL, GAIL and RCF have agreed in principle that RCF will manufacture 300 tonne per day of ammonium nitrate for which CIL will supply 2.5 million tonne of coal per year. CIL’s involvement in RCF’s production of ammonium nitrate is through a MoU recently entered into with GAIL for setting up an INR 2,400 crore surface coal gasification project. This plant will produce gas that will be used as feedstock for producing fertilizers. GAIL, in turn, had signed a MoU with RCF for using the gas produced by the CIL Gail JV to manufacture urea.

Ammonium nitrate is the principal ingredient for making explosive substances used as blasting material for extracting coal from mines. India is facing a crunch in the supply of ammonium nitrate, as a result of which CIL’s mining activities are suffering.