New Delhi: Coal India Limited (CIL) and ArcelorMittal Nippon Steel India Private Limited (AMNS India) have signed a non-binding Memorandum of Understanding (MoU) to explore the use of synthetic gas (syn-gas) from a proposed coal gasification facility near AMNS India’s Paradip pellet plant in Odisha.
The MoU was executed on Wednesday and will initially focus on assessing the technical, commercial and implementation feasibility of the proposed project, including the preparation of a Preliminary Feasibility Report (PFR).
CIL, AMNS to Explore Syn-Gas Project at Paradip
Under the proposed arrangement, CIL plans to establish a coal gasification facility adjacent to or at the AMNS Paradip Pellet Plant.
The facility is proposed to be coupled with Carbon Capture, Utilisation and Storage (CCUS) technology.
The companies will initially examine:
- Technical feasibility of the project
- Commercial viability
- Implementation modalities
- Potential utilisation of syn-gas
- Preparation of a Preliminary Feasibility Report
The MoU is non-binding at this stage and does not disclose details such as project capacity, investment, coal source, gasification technology, implementation timeline or equity structure.
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CIL Exploring Coal Gasification Near Industrial Users
The proposed arrangement aligns with CIL’s strategy of developing coal-to-syn-gas facilities close to major industrial consumers.
CIL had earlier outlined two potential models for coal gasification projects:
- Pithead-based projects for producing syn-gas near coal mines.
- Industry-adjacent projects, where a gasification plant is established near a large industrial consumer and the output is tailored to the requirements of a dedicated anchor off-taker.
The second model is particularly relevant to the proposed Paradip project, as the facility would be located near AMNS India’s pellet plant.
CIL has also sought expressions of interest from industrial users willing to purchase syn-gas produced from facilities established by CIL or its designated special purpose vehicle (SPV) or joint venture (JV).
AMNS India Has Major Operations at Paradip
AMNS India is a joint venture between ArcelorMittal, which holds a 60% stake, and Nippon Steel, which holds the remaining 40%.
The company expanded its Paradip pellet operations after commissioning a second 6 MTPA unit, taking the pellet capacity at the complex to 12 million tonnes per annum.
AMNS India’s operations also include an 8 MTPA beneficiation plant at Dabuna, which is connected to Paradip through a 253-km slurry pipeline.
CIL Already Developing Coal Gasification Projects
Coal India currently has two incorporated coal gasification joint ventures.
One is Bharat Coal Gasification and Chemicals Limited (BCGCL), in which CIL holds 51% and Bharat Heavy Electricals Limited (BHEL) holds 49%.
BCGCL is developing a coal-to-ammonium nitrate plant at Lakhanpur in Jharsuguda district, Odisha, over around 350 acres of Mahanadi Coalfields Limited (MCL) land.
MCL is expected to supply:
- 0.79 million tonnes per year of washed coal
- 1.19 million tonnes per year of coal rejects from its Ib Valley washery
BCGCL has received environmental clearance and awarded EPC contracts. Its groundbreaking ceremony was held on June 20, 2026, with commissioning targeted for FY2030.
CIL-GAIL Gasification Project Also Under Development
CIL’s coal gasification partnership with GAIL (India) Limited for producing synthetic natural gas in West Bengal is currently at the pre-construction stage, with tendering underway.
The project is also targeted for commissioning in FY2030.
A separate collaboration between CIL and SAIL for supplying syn-gas for direct reduced iron (DRI) production at Durgapur has so far remained at the feasibility-study stage and has not received formal project sanction.
Government Pushes Coal Gasification and CCUS
The proposed CIL-AMNS project comes against the backdrop of the government’s push to expand coal gasification and carbon capture technologies.
The Union Cabinet approved a ₹37,500-crore scheme for surface coal and lignite gasification on May 13. The scheme targets gasification of around 75 million tonnes of coal by 2030.
Under the scheme:
- Incentives are capped at 20% of plant and machinery cost
- Maximum incentive is ₹5,000 crore per project
- Maximum incentive is ₹12,000 crore per entity group
- Incentives will be released in four milestone-linked instalments
The government has also extended coal linkage tenure to 30 years under the “Production of Syngas leading to Coal Gasification” sub-sector in the non-regulated sector linkage auction framework.
₹20,000 Crore Allocation for Carbon Capture
The government is also increasing its focus on Carbon Capture, Utilisation and Storage (CCUS).
The Union Budget 2026-27 allocated ₹20,000 crore over five years for carbon capture technologies in heavy industries.
The Department of Science and Technology’s RD&I roadmap has also outlined an ambition to capture 750 million tonnes of CO₂ annually by 2050 from hard-to-abate sectors such as steel and cement.
India’s steel industry has so far seen CCUS deployments largely at the pilot scale, including initiatives at Tata Steel’s Jamshedpur facility and JSW Steel’s Dolvi plant.
Syn-Gas Could Support Lower-Carbon Steelmaking
Gas plays an important role in steel production, particularly in the direct reduced iron (DRI) route. However, a large majority of India’s DRI production continues to rely on coal.
The proposed CIL facility would convert coal into syn-gas, which could potentially be used as a fuel or feedstock for industrial and steelmaking applications.
The integration of CCUS into the proposed project could help address emissions associated with the gasification process and support efforts to develop lower-carbon pathways for heavy industry.
MoU Could Open New Avenue for CIL’s Coal Gasification Strategy
The CIL-AMNS agreement represents another potential application for coal gasification, linking CIL’s coal resources and gasification capabilities with a large industrial consumer.
However, the project remains at an exploratory and feasibility-assessment stage. Further decisions on investment, technology, capacity and implementation would depend on the outcome of the technical and commercial evaluation.
About Coal India Limited
Coal India Limited (CIL) is a Maharatna public sector enterprise under the Ministry of Coal, Government of India. It is the country’s largest coal-producing company and operates through several subsidiary companies across major coal-producing regions. Alongside its core coal mining operations, CIL is pursuing diversification into coal gasification, clean energy and other emerging areas.
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