Why BCGCL's coal-to-ammonium nitrate project matters for India?

New Delhi: President Droupadi Murmu and Prime Minister Narendra Modi remotely laid the foundation stone of India's first commercial-scale coal-to-ammonium nitrate plant on June 20, marking the start of a project designed to turn domestic coal into an industrial chemical the country has long imported. Union Minister for Coal and Mines G Kishan Reddy was present at the site.

The plant is coming up at Lakhanpur in Odisha's Jharsuguda district.

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Plant to make an explosive-grade chemical India imports

The plant will produce around 0.66 million tonnes per annum (MTPA) of technical grade ammonium nitrate, or about 2,000 tonnes a day. This is the explosive-grade variant, not the fertiliser grade: it is the principal ingredient in most commercial explosives used for rock blasting in mines, stone quarries and infrastructure projects, chiefly in the form of ANFO (ammonium nitrate–fuel oil).

India does not make enough of this chemical. Domestic production falls short of what coal and non-coal mining and infrastructure need, so explosive manufacturers blend domestic output with imported material. Imports come mainly from Russia, China, Ukraine and western Europe. The average price of imported ammonium nitrate for 2025 was about USD 425 a tonne. A plant of the scale of BCGCL's project adds a large domestic source and trims the import bill.

CIL-BHEL JV owns the plant; MCL supplies land and coal

The plant is built by Bharat Coal Gasification & Chemicals Limited (BCGCL), a joint venture in which Coal India Limited (CIL) holds 51 percent and Bharat Heavy Electricals Limited (BHEL) holds 49 percent. Mahanadi Coalfields Limited (MCL), a CIL subsidiary, is contributing roughly 350 acres of coal-bearing land at Lakhanpur and will supply the feedstock — 0.79 million tonnes per year (MTY) of washed coal and 1.19 MTY of coal reject from its Ib Valley washery.

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Indigenous PFBG technology to be deployed at commercial scale

The plant uses Pressurised Fluidised Bed Gasification (PFBG) technology, developed indigenously by BHEL. The route converts the fossil fuel into synthesis gas (syngas) via coal gasification, which is then processed into the final product. It is the first commercial-scale use of the technology in India, which the Ministry of Coal frames as a proof point that the private sector can follow.

Rs 25,016-cr project targets September 2029 commissioning

The project carries an estimated investment of Rs 25,016 crore. It has received Single Window Clearance from Odisha's High-Level Clearance Authority and a Rs 1,350-crore incentive from the Ministry of Coal under its coal gasification scheme. With clearances in place and Lump Sum Turnkey execution packages awarded, commissioning is targeted for September 2029.

Project sits inside the National Coal Gasification Mission

The plant is part of the National Coal Gasification Mission, under which the government is targeting the gasification of 100 million tonnes of coal by 2030. To get there, it has approved incentive schemes with a cumulative outlay of Rs 46,000 crore — a Rs 8,500-crore Viability Gap Funding (VGF) scheme in January 2024 and a Rs 37,500-crore scheme announced in May this year — aimed at reducing dependence on imported LNG, urea, ammonia, methanol and coking coal. India imports end-use and intermediate chemical products worth about Rs 2.7 trillion a year and holds the world's fifth-largest coal reserves at more than 400 billion tonnes, which gasification is meant to monetise beyond power generation.

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