As a precursor to commercial coal mining for private entities, the coal ministry has decided to allot 16 mines to coal-bearing states for sale of the fuel to any entity irrespective of end-use. This will put states in direct competition with Coal India, which enjoys a near monopoly on mining coal for commercial purpose.
The states will have complete independence on pricing of coal and getting any entity as a mine developer and operator (MDO).
However, the ownership of the mine will remain entirely with the state, coal secretary Anil Swarup told reporters. “This is a step towards allowing private players to enter commercial mining. The government will not only test the waters in the area, but will also have knowledge about how market forces work,” Swarup added.
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In theory, the states could rope in international developers to operate these mines. The states have been suggested to ensure that small industries’ demand for coal be met via these mines, but there is no bar on selling the fuel to any entity.
“We expect that the incremental coal production from these mines would cater to the unmet coal demand in the country, especially of medium, small and micro industries, and bridge the gap between demand and supply…,” Swarup said.