Larsen & Toubro’s Energy Hydrocarbon Onshore business secured a major contract valued between Rs 2,500 crore and Rs 5,000 crore from Bharat Coal Gasification and Chemicals Limited to construct a coal-to-ammonium nitrate project in Lakhanpur, Jharsuguda district, Odisha. Announced in May 2026, this project is India’s largest single coal-to-chemical facility under development and the third-largest globally in terms of ammonium nitrate conversion capacity. The contract involves building a nitric acid plant and an ammonium nitrate plant with a production capacity of 2,000 tonnes per day, helping India utilize its domestic high-ash coal reserves cleanly while reducing dependence on chemical imports.
Project Overview and Institutional Framework
Corporate and Administrative Setup
The project operates under a unique institutional arrangement to leverage public sector strength and private sector execution.
- Project Owner: Bharat Coal Gasification and Chemicals Limited is a joint venture between Coal India Limited, which holds a 51% equity stake, and Bharat Heavy Electricals Limited, which holds a 49% stake.
- EPC Contractor: Larsen & Toubro’s Energy Hydrocarbon Onshore business executes the work on a Lump Sum Turnkey basis, establishing single-point accountability for design, engineering, procurement, construction, commissioning, and final handover.
- Land and Resource Provider: Mahanadi Coalfields Limited, a premier coal-producing subsidiary of Coal India Limited operating in Odisha, provided the required land and will supply high-ash coal from nearby mines.
- Financial Backing: The Ministry of Coal provides financial assistance of Rs 1,350 crore as part of a broader fiscal incentive package to promote cleaner coal technologies.
Technical Infrastructure and Capacity
The project incorporates specialized chemical manufacturing facilities to process synthesis gas derived from coal into downstream chemical products.
| Infrastructure Unit | Targeted Daily Capacity | Core Industrial Application |
| Nitric Acid Plant | Process-dependent primary input | Intermediate chemical processing and conversion into nitrates |
| Ammonium Nitrate Plant | 2,000 tonnes per day (0.66 MMTPA) | Industrial blasting agents for mining and infrastructure sectors |
Core Technology: Surface Coal Gasification
Understanding the Gasification Process
Surface coal gasification converts solid coal into a usable gas mixture called synthesis gas, or syngas, rather than burning the coal directly.
- Chemical Reaction: Coal reacts with controlled amounts of oxygen and steam under high pressure and temperature.
- Syngas Composition: The reaction produces a gaseous mixture consisting primarily of carbon monoxide, hydrogen, carbon dioxide, natural gas, and water vapor.
- Downstream Synthesis: The syngas is cleaned and processed into ammonia. The ammonia reacts with nitric acid to produce technical-grade ammonium nitrate.
Overcoming High-Ash Coal Challenges
Indian coal has a high ash content, often making standard imported gasification systems inefficient. This facility uses BHEL’s proprietary Pressurised Fluidised Bed Gasification technology. This indigenous method processes domestic high-ash coal directly, ensuring operational stability without requiring expensive, low-ash imported coal feedstocks.
Strategic Objectives and Industrial Utility
National Target for 2030
The project aligns with the National Coal Gasification Mission, which sets a target to achieve 100 million tonnes of coal gasification capacity by 2030. The government aims to diversify coal utilization beyond thermal power plants, transforming coal into value-added products like ammonium nitrate, methanol, ammonia, and synthetic natural gas to meet climate goals.
Economic and Supply Chain Benefits
- Import Substitution: India imports large quantities of technical-grade ammonium nitrate. Local production conserves foreign exchange reserves and shields domestic industries from global supply chain disruptions.
- Cost Reduction for Mining: Coal India Limited is a major consumer of industrial explosives. Integrating this domestic manufacturing facility reduces procurement costs for its mining operations by an estimated 10% to 15%.
- Regional Industrial Clustering: Placing the chemical facility next to major coal mines in Jharsuguda establishes an integrated industrial cluster, lowering transportation costs and creating skilled chemical engineering jobs in Odisha.
IASPOINT Booster Facts for UPSC
- Technical-Grade Ammonium Nitrate: Unlike agricultural fertilizer-grade ammonium nitrate, technical-grade ammonium nitrate is manufactured specifically for the explosives industry. It acts as an oxidizing agent when mixed with fuel oil to create ANFO, the standard blasting agent in open-cast mining and infrastructure construction.
- Dual Nature of Ammonium Nitrate: The compound is regulated strictly under the Ammonium Nitrate Rules, 2012, in India due to its potential misuse in unauthorized explosives, requiring licensed storage and tracking from production to consumption.
- Environmental Advantages over Combustion: Coal gasification generates fewer sulfur dioxide and nitrogen oxide emissions compared to traditional coal combustion in thermal power plants. It also allows for easier carbon dioxide separation, making the integration of Carbon Capture, Utilisation, and Storage systems highly viable.
- Maharatna Synergy: Both Coal India Limited and Bharat Heavy Electricals Limited hold “Maharatna” status. This status gives their boards enhanced financial autonomy to invest up to Rs 5,000 crore in joint ventures without prior government approval.