CoalMin to auction 20 scattered blocks

The mines together have 50-60 mn tonnes of reserves.

Written by Priyadarshi Siddhanta | New Delhi | Updated: May 6, 2015 2:02 am
coal auction, coal block auction, coal blocks, coal ministry, Union Cabinet coal mines auction, business news, Indian express Coal ministry is of the view that by the virtue of having minimal reserves, these blocks would be economically unviable for mega project operators and unsuitable for scientific mining.

After garnering over Rs 2 lakh crore from auction of 29 coal blocks, the coal ministry is likely to approach the Union Cabinet for auctioning 20 small mines, which are located in isolated areas and together have 50-60 million tonnes annually extractable reserves.

The move comes as power, steel and cement companies are awaiting an announcement from the coal ministry on commencement of the third tranche of auctions of ready-to-operate blocks. These 20 blocks are separate from the list of mines already finalised for the impending rounds of auctions. The ministry is planning to propose that state mining corporations should be allotted these mines through the government dispensation route ,while private companies would have to win them through competitive bids for their captive use.

The Indian Express had in May 2011 reported that the erstwhile UPA government had finalised a policy for identifying these isolated mines, but could not initiate the competitive bidding process as there was no definition of such blocks in the Coal Mines Nationalisation Act, 1973. So the coal ministry has now decided to seek the Cabinet’s approval soon for its roadmap to auction and allocate them.

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The coal ministry is of the view that by the virtue of having minimal reserves, these blocks would be economically unviable for mega project operators and unsuitable for scientific mining. Hence, they can’t be developed in a coordinated and integrated manner like the ones already auctioned and would minimal evacuation infrastructure, a source in the coal ministry said. So the bidding criteria for these mines are being determined in a way that their bids attract small and medium companies engaged in production of power, steel and cement.

“The huge response seen in the auctioning of 29 mines recently may not happen again. The criteria would be designed to attract bids from the industry,” the source said. Under the mechanism being firmed up, winning bidders would make an upfront payment to state government where these mines are located along with royalty to authorities. The concerned state would make efforts to hand over the surface area of the mine free of encumbrances, he said.

The UPA government had toyed with idea of allocating such mines to cooperatives run by villages near such blocks, but it was discarded as they would not have the required wherewithal to operate them.

Considering the blocks are situated in scattered locations, ministry is also exploring possibility of clubbing 4-5 mines together and auctioning them.

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  1. S
    May 6, 2015 at 11:01 am
    Ever since the supreme court struck down the "arbitrary" and "illegal" allocations of 214 out of the 218 coal blocks allocated since 1993, an air of uncertainty hung over the Indian industry.Auction of coal blocks through transparent and simpler norms has accrued Rs 2.07 lakh crore for the exchequer through 31 coal blocks in 2 phases. As per the projections, the auction mode will prove to be a boon for the producers in the long run - while the payments for the blocks raised through auction will depend on the actual production, the actual profits will be guided by the global coal prices - and for a resource which is at once scarce and reliable - prices will only move up. Add on the point that Coal India increased its production by 7% in the last 12 months, another sign of plugging the gap between availability and requirement of coal, which has been bane of the industry says Mr. Ratul Puri, Chairman at Hindustan Power projects Private Limited. Read more about coal auction in this article by Mr. Puri.