It was in 1909 that Alfred Weber formulated a theory of industrial location. Simply speaking, he sought to determine the ideal location for the production of goods which would depend upon least costs, both in terms of the total costs of transporting raw material to the production site and product from the production site to the market. The weight of the raw materials and the final commodity are important determinants of the transport costs and the location of production.
Commodities that lose mass during production—a reduced amount of processed bulk,can be transported less expensively from the production site to the market whereas it is more expensive to transport the heavier raw material to the production site. The production site, therefore, will prefer to be located near the raw material sources. For example, industries like iron and steel, which use very large quantities of coal and iron ore, losing lot of weight in the process of manufacturing, are generally located near the sources of coal and iron ore. Added to these are non-geographical historical factors whereby industries tend to develop at the place of their original establishment.
Four government undertakings having a slightly more than half, about 55 per cent, of coal production by Coal India Limited (CIL) have been considered for the analysis. They are Bharat Coking Coal Limited (BCCL), Mahanadi Coalfields Limited (MCL), Northern Coalfields Limited (NCL) and Western Coalfields Limited (WCL). These companies operate in the coalfields of Raniganj, Jharia, Talcher, Ib Valley, Singrauli, Pench-Kanhan, Kamptee, Bander-Umrer and Wardha Valley.
Coal India Limited (CIL) is a state owned coal mining company controlled by the Ministry of Coal, Government of India. Operating through 82 mining areas, it is one of the largest coal producers in the world. It holds about 84 per cent share in coal production in India with seven wholly owned coal producing subsidiaries, one fully controlled coal producing unit and one mine planning and consultancy company in India. They are Eastern Coalfields Limited (ECL), Bharat Coking Coal Limited (BCCL), Central Coalfields Limited (CCL), South Eastern Coalfields Limited (SECL), Western Coalfields Limited (WCL), Northern Coalfields Limited (NCL), Mahanadi Coalfields Limited (MCL), North Eastern Coalfields (NEC) and Central Mine Planning and Design Institute Limited (CMPDIL).
The production of CIL has increased over the years. Figure 2 indicates the increase in production by CIL between 2010-11 and 2015-16.
Sites located at port areas may have been disadvantageous in earlier times because of their distance from the coalfields. Today however, the locational disadvantage has been nullified with the access to water transport, one of the relatively cheaper means of transport, being put to good use. Newer, mostly private units find it cheaper to import coal, particularly if it is meant for power generation, which uses low-grade coal. Coastal areas of Andhra Pradesh, Gujarat, Maharashtra and Tamil Nadu are cases in point.
Another significant change that disables the establishment of thermal and other manufacturing units in certain areas have been brought about by stringent contemporary environmental norms. It is getting increasingly difficult to obtain requisite environmental clearances, particularly in already congested and polluted areas—many of which falls near the coal mining areas. This negates the role of locational advantages.