Coalgate may further delay mining approvals: Report

The tabling of the CAG report on coal block allocations could result in further delays in getting mining approvals, a securities firm said in its research report today.

"We are concerned about further delays in mining approvals due to policy freeze and/or imposition of conditions which could dilute returns from mines," Edelweiss Securities said in its sector report on metals and mining.

The CAG report may impact leading metal and mining companies and the effect may be more pronounced on Hindalco, JSPL and Sterlite and BALCO while on the positive side, allocations to Coal India may increase as recommended by CAG, the firm's analyst Prasad Baji said.

The CAG report has indicted the government for not following the auction mechanism for allotting captive coal blocks post 2004 and adopting a non-transparent, screening committee-based mechanism without comparative evaluation.

The report lists 57 coal blocks as benefiting from likely "windfall gains" of Rs 1.86 lakh crore as compared to draft report figure of Rs 2.93 lakh crore. Ironically, all of these mines, except one, are non producing and are awaiting approvals for more than 3 years.

"We view the "windfall gain" estimate as overstated considering that there was no application of the present value concept, the report said.