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India sets deadline for commercial coal block auctions

26th February 2018

By: Ajoy K Das

Creamer Media Correspondent

     

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KOLKATA (miningweekly.com) – Close on the heels of opening up commercial coal mining for private investors last week, the Indian government has set a 2019 deadline for completing the auction process.

While government officials remain tightlipped about the number of coal blocks that will be up for auction in the first tranche, Coal Secretary Susheel Kumar said in a media statement that, “our expectations is to complete the process of auction by March 31, 2019”.

Since auctions were made mandatory for allocating coal assets, the Indian government has auctioned 29 coal blocks to user industries for captive mining and allocated 16 mines to various provincial governments for their thermal power plants.

Sources in the Coal Ministry say that the government is optimistic about the expected response from private investors to the auction, hinting that the Ministry has already received “feelers” from international mining companies.

Having ended the nationalisation of the coal industry, which stood since since 1973, the Coal Ministry is also mulling options of further reforms of the industry.

Sources indicate that the Coal Ministry will pursue further policy changes that will blur the distinction between commercial mining and captive mining and allow only the former to prevail.

This could be achieved by removing end-use restriction clause at the time of auction of coal blocks for captive mining by end-use industries like steel, cement and the like and permitting full production and supply freedom, including merchant sale of production in excess of own consumption to captive coal miners, the sources say.

Hinting of such a thinking in government circles, Kumar in the media statement said, “We can also take a decision in the future that only commercial coal mining will prevail. We have experience in end-use auction of coal blocks. Auction of commercial mining will be another experience. We can always compare the two and conclude which is better for the country in the long term.”

Last week, the apex Cabinet Committee for Economic Affairs approved the auction of coal blocks for commercial mining. An investor offering the higher per ton price will secure the asset.

Hitherto, private investors were only permitted captive coal mining for mandatory own usage in industries like steel, cement and aluminium, while government-owned Coal India Limited accounted for 80% of commercial coal production followed by government miners like Singareni Collieries Company and NLC.
 

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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