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CIL may takeover 40 mines as coal min explores experts advice

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The coal ministry is exploring the option of appointing an outside consultant to assist Coal India Ltd (CIL) for the temporary takeover of 40 working mines and their continued operations. The ministry is also looking at an expert group to advise itself on how to go about taking possession of the mines and creating the framework for the auction to be carried out for the de-allocated mines.

RV Shahi, the country's longest serving power secretary from 2002 and 2007, is likely to play a leading role in that body while other names are being selected, sources said.

Some senior industry officials, who dna spoke to, believe that CIL, the world's largest coal miner, would do a good job of managing the mines once the de-allocated mines are handed over to it. "We will be in a better position after sometime to say how we would be managing the mines that might come to us following the Supreme Court verdict. As of now, we are not aware of the technical details of those mines," AK Debnath, chairman cum managing director of Coal India subsidiary, Central Mine Planning & Design Institute Ltd (CMDPIL), told dna.

The subsidiary carries out all the technical studies including exploratory work on the mines before CIL actually starts working on them. CMDPIL head, however, said he is not aware of any internal technical committee being formed by CIL for this purpose.

After taking over of mines, CIL is unlikely to face any problem in running those mines, said Partha Bhattacharya, its former chairman and a leading voice in the country on the sector.

The confidence in CIL's abilities stem from its acquired expertise but more importantly on a little known fact that half of its output is mined by contractors and not by its own staff. "Close to 50% of CIL's production comes from mines worked by contractors. The captive mines of the private owners were also being mined by such contractors. So the change-over would only involve contractors reporting to a different set of owners. Also, CIL's mines are present at most of the places where these de-allocated blocks are located. So, changeover wouldn't be a problem logistically," former chairman said.

A problem could crop up regarding the compensation issue as wages received by the contractors of CIL are much higher than what the contractors of private mine owners get, a CIL director, who refused to be named, said.

Also, in case contractors are to be changed, mines might have to be shut down temporarily. CIL is the single largest coal producing company operating 467 mines of which 273 are underground, 164 opencast and 30 mixed mines, spread across 81 mining areas spread over 8 states.

In 2013-14, the company produced 462.42 million tonnes of coal. Additionally there are about 126 future projects with a total envisaged production capacity of about 441 million tonnes a year.

Bhattacharya said there is a case for merger of the smaller uneconomical captive mines with larger manageable ones, a view that is gaining ground and has found favour among stakeholders like SBI chairperson Arundhati

Bhattacharya, whose bank has exposure to many of the de-allocated mines. "The country created such a large number of mines in a mindless artificial manner just to distribute them to a large numbers of private players. Natural blocks are those which are surrounded by natural barriers. But in case of captive mines allocated, artificial barriers were created within a single natural block to create multiple captive mines. This led to suboptimal production as large scale mechanised mining couldn't be implemented," Bhattacharya said

Bhattacharya didn't say if this idea is already being considered by the government but indicated that such a move might be needed in changing the Coal Mines Nationalisation Amendment Bill.

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