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.
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.