Private companies would now be able to mine and sell coal in India, alongside state-owned Coal India Limited.
Four years after enabling commercial mining and sale of coal through the Coal Ordinance (Special Provisions), 2014, the Cabinet on Tuesday approved bidding process for commercial mining.
Commercial mining enables sale of coal in open market as a commodity, with price determined by the market.
Elaborating on the methodology, Coal Secretary Susheel Kumar said the auction would be on a transparent online platform. “There will no end-use and price restriction. It would be up to the players to bring down prices in the open market.” Companies would also be free to export.
Piyush Goyal, minister for coal and railways, said: “The quality of coal would improve with commercial mining, and imports would come down. We want India to be self-sufficient in coal. The move aims to improve ease of doing business in India.”
Kumar said the Centre would not get any share from commercial mining. The government would conclude the auction in 2018-19 so that production can start in two to three years. He said the mines and the auction platform have not been identified.
“There is no cap over prices or types of coal. Allied infrastructure such as washeries can be set up by the government or the companies themselves.” Goyal said: “The government has taken several measures in the coal sector, which will enhance competition in the system, bring efficiency in production, reduce import, save foreign exchange, and generate job opportunities.”
In 2015, the government had allowed allotment of coal mines to states for mining and commercial sale to medium, small and cottage industries.
This was after an auction in 2014 of around 29 mines to private players and states for captive use in power, steel and the aluminium industry.
Experts called the move positive. “Power generators can now source commercial coal to improve margins and availability. Further, as merchant power prices fall, power utilities and manufacturing industry, too, will benefit from lower energy costs,” said Kameswara Rao, partner and leader-energy, utilities and mining, PwC.
Anjani Agrawal, partner and national leader, metals and mining, EY, said, “Success will depend on the size of the blocks identified, flexibility of sales, distribution and pricing, and the consistency of regulations over a long period.”
A K Khurana, director general, Association of Power Producers, said: “We hope the government will learn from the earlier auctions and make conditions/regulations conducive for competitive and sustainable price discovery. The objective of auction would need to shift from revenue maximisation to productivity & sustainability.”
Whether the proposed move would become a threat to Coal India, Goyal said commercial mining would help the state-owned miner, too, because competition would ensure efficiency. Kumar said commercial mining would have no bearing on Coal India’s production targets. Coal India aims to touch 1 billion tonnes of production by 2019-20.
Coal India has been the major commercial miner in India for 41 years and has a market share of 80 per cent. Another player is Singareni Collieries, a venture of Coal India and the Telangana government. Balance coal requirement is met through imports and production from captive mines.
Four years after enabling commercial mining and sale of coal through the Coal Ordinance (Special Provisions), 2014, the Cabinet on Tuesday approved bidding process for commercial mining.
Commercial mining enables sale of coal in open market as a commodity, with price determined by the market.
Elaborating on the methodology, Coal Secretary Susheel Kumar said the auction would be on a transparent online platform. “There will no end-use and price restriction. It would be up to the players to bring down prices in the open market.” Companies would also be free to export.
Piyush Goyal, minister for coal and railways, said: “The quality of coal would improve with commercial mining, and imports would come down. We want India to be self-sufficient in coal. The move aims to improve ease of doing business in India.”
Kumar said the Centre would not get any share from commercial mining. The government would conclude the auction in 2018-19 so that production can start in two to three years. He said the mines and the auction platform have not been identified.
“There is no cap over prices or types of coal. Allied infrastructure such as washeries can be set up by the government or the companies themselves.” Goyal said: “The government has taken several measures in the coal sector, which will enhance competition in the system, bring efficiency in production, reduce import, save foreign exchange, and generate job opportunities.”
In 2015, the government had allowed allotment of coal mines to states for mining and commercial sale to medium, small and cottage industries.
This was after an auction in 2014 of around 29 mines to private players and states for captive use in power, steel and the aluminium industry.
Experts called the move positive. “Power generators can now source commercial coal to improve margins and availability. Further, as merchant power prices fall, power utilities and manufacturing industry, too, will benefit from lower energy costs,” said Kameswara Rao, partner and leader-energy, utilities and mining, PwC.
Anjani Agrawal, partner and national leader, metals and mining, EY, said, “Success will depend on the size of the blocks identified, flexibility of sales, distribution and pricing, and the consistency of regulations over a long period.”
A K Khurana, director general, Association of Power Producers, said: “We hope the government will learn from the earlier auctions and make conditions/regulations conducive for competitive and sustainable price discovery. The objective of auction would need to shift from revenue maximisation to productivity & sustainability.”
Whether the proposed move would become a threat to Coal India, Goyal said commercial mining would help the state-owned miner, too, because competition would ensure efficiency. Kumar said commercial mining would have no bearing on Coal India’s production targets. Coal India aims to touch 1 billion tonnes of production by 2019-20.
Coal India has been the major commercial miner in India for 41 years and has a market share of 80 per cent. Another player is Singareni Collieries, a venture of Coal India and the Telangana government. Balance coal requirement is met through imports and production from captive mines.
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