By Our Correspondent
NEW DELHI/BHUBANESWAR/TALCHER/JHARSUGUDA: The Government of India will launch auction of coal mines for commercial mining with the theme “UNLEASHING COAL: NEW HOPES FOR ATMANIRBHAR BHARAT” on June 18,. Prime Minister Narendra Modi will grace the occasion as chief guest in the launching Programme to be virtually held at New Delhi.
“We are launching first-ever commercial coal auctions in country on 18th June. Event will be graced by PM @NarendraModi Ji. It is his vision & guidance to make #AtmaNirbharBharat in coal. I am proud that we are well on our way to achieve it” Union Minister of Coal & Mines Pralhad Joshi tweeted on Thursday.
Major producers of metals, power and cement are expected to participate in the auction. “Initial auctions for the larger mines may draw the larger players who will bid to de-risk supply and cost to their downstream business. Others will bid to use the mines to make profits through efficient and timely supply of coal in the open markets and still others who will seek to achieve both.
The broader acceptance of the reforms will be tested by the type and the number of international, private and public sector participants in the first few rounds. Unlike in the past, it is expected that the auctions will be see a broader mix of bidders and hence a higher competition between the interested parties for acquiring mines.
Commercial coal mining is expected to boost domestic production and lead to reduced coal imports, resulting in estimated savings of Rs 1.7 lakh crore or more. Private investments in new mines will also create thousands of jobs and big earnings for coal-bearing states.
Private players like Rungta Mines Limited, Jindal Steel and Power Ltd, JSW Steel-Energy, Essel Mining and Industries Ltd, Hindalco, Tatas, Sesa Goa, Vedanta Industries Ltd, Adani Group and global players like Rio Tinto, BHP Billiton, PesBody, Glencore and Vale are among those eyeing on Odisha’s Coal block, sources said.
No chance of aggressive bidding in coal sector as it was seen in case of Iron, Ore, Manganese and Chrome blocks in Odisha’s mineral rich Keonjhar, Sundargarh and Jajpur districts, when Naveen Patnaik led Government went for auction of 23 blocks and mines owners too went to above 180% premium. The Coal Ministry in its 2 consultation meets at Kolkata and Mumbai held in last February, had made it abundant clear that there will be no aggressive bidding for coal blocks.
Odisha , which houses 79,295 Million ton of coal deposits, is the second most Coal bearing State in the Country while India is the 5th biggest coal bearing Nation in the World. In past, Odisha Government only auctioned 1 coal block-Jamkhani, which had won by Anil Agarwal’s Vedanta Limited. The Coal Ministry is auctioning as many 40-50 blocks.
Odisha has hiked it coal production by 23 % in last 5 years, while National Coal Production increased by 24 %. Out of the Coal Blocks, 21 have been reserved for auction to all Non Regulated Sectors, such as Steel, Cement and 6 Coking Coal Mines for Iron Ore and Steel. India’s coal production was 730.54 Million ton during 2018-19 with a growth of 7.9 %
In order to address the concerns of the potential bidders, the Coal Ministry had conducted pre-bid consultations stakeholders in Kolkata and Mumbai in February this year. Based on the suggestions received, the government has now agreed to ease bidding conditions that would form part of the document that would go for Cabinet approval, media reports said.
The commercial mining auctions could see in all 15 large Coal blocks with an annual production potential of 5-10 million tonnes being put up for bidding in phases. The reserves in five of these mines could be in excess of 500 million tonnes. These could fetch anywhere between Rs 5,000 and 6,000 crore to the State government.
It will be a historic day when Indian coal sector will break free from the shackles of restrictions to charter new growth.As India has recently embraced Atma Nirbhar Bharat Abhiyan under the visionary and decisive leadership of Prime Minister Narendra Modi, the coal & mining sector has started gearing up to make the country Atma Nirbhar (self-reliant) in coal mining through structural reforms in the coal sector.
The commercial coal mining auctions are completely different from earlier regime of restricted sectors, use and price. Now there are no such restrictions at all.The proposed auctions have terms and conditions which are very liberal allowing new companies to participate in the bidding process, reduced upfront amount, adjustment of upfront amount against royalty, liberal efficiency parameters to encourage flexibility to operationalize the coal mines, transparent bidding process, 100% FDI through automatic route allowed and reasonable financial terms and revenue sharing model based on National Coal Index.
The successful bidders also will have flexibility in coal production unlike past and have provision for incentives for early production and coal gasification.The coal mines auction process will lay strong foundation for energy security in the country by producing additional coal providing large scale employment and huge opportunities for investment in coal sector. These efforts will supplement the 01 billion tonne coal production likely from Coal India in FY 23-24 and meet full requirement of domestic thermal coal.
The successful bidders will also have flexibility in coal production unlike the past and have provision for incentives for early production and coal gasification.Around 50 coal blocks are likely to be auctioned for commercial coal mining, a source had said earlier.
The mines to be put up for auction would be in three categories — small, medium and large. Some of the mines would come into production within a year of being auctioned, the source had added.The government had last month approved a methodology for commercial mining of coal on revenue sharing basis.The decision was taken during a meeting of the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister.Finance Minister Nirmala Sitharaman, while announcing the stimulus package for the coronavirus-hit economy, had said coal mines would be auctioned to the private sector for commercial mining to end reliance on imports and improve local production.
The methodology approved by CCEA provides that bid parameter will be revenue share, the government had said, adding that bidders would be required to bid for a percentage share of revenue payable to the government.Coal remains India’s fuel for energy at 54.3 percent of total 3.7 lakh mega watt (MW) installed power generation capacity in India. In FY20, growth in conventional generation of electricity was 0.26 percent against a high of 8.43 percent in FY15. Capacity utilisation was at 54.73 percent in FY20 as against 60.58 percent in FY15 for the coal based power plants.
The Coal Ministry first began the discussion in 2015 followed by a cabinet approval in 2018, to end-user restriction on sale or utilisation of coal. In March 2020, the said provision was approved under the law and methodology for auction was approved on May 20, 2020.
