Government to give out large mines for commercial mining

The government may offer some large-sized coal blocks to commercial miners in a bid to make the sector more competitive.

"For commercial mining the issue hasn't been decided yet but there is a probability of some big blocks being offered," said S K Shahi, joint secretary, Ministry of Coal, while addressing the Indian Coal Conference organised by mjunction.

He clarified to media that the mega blocks would include any block with a proven reserve of around 500 million tonne (mt).

"Small blocks may not add to the scale for commercial mining. We need to give bigger blocks so that the miner can achieve economies of scale and compete," he said.

But before private sector commercial miners are allowed, blocks would first be given to state government-owned entities to commercially exploit them for the benefit of state government-owned power producers or other state-based entities.

"Allocation of mines to end-users instead of commercial miners is peculiar to India and the model hasn't been successful. World over, it is commercial miners that take care of mining with their superior mining technologies," Partha Bhattacharyya, former chairman and managing director of Coal India, said.

The need for commercial mining has been gaining ground following past slackness in the growth of coal production dominated by Coal India, and at a time when production from even ready and working mines which were auctioned off earlier are yet to start production in any meaningful way.

"Right now, our concern is that out of the 34 blocks which were producing and were auctioned, only seven are producing, as of September-end. The rest should come into production as soon as possible," he said.

Post allocation, there are about 19 actions or clearances required to be taken and delays in restarting operations in even working mines is because of several issues including those involving state governments.

"In Chhattisgarh, we have an issue of stamp duty as the state government wants to levy it on vested block at current land value which would be astronomically high. We are also facing issues about mutation of the blocks. In Jharkhand, as per state rules, mutation is possible only on sale or transfer of land. Here, blocks have been vested for which there is no provision," he said.

In a bid to raise coal output, government is working on faster clearances of mining projects, and Sahi said in the last six months the Ministry of Environment and Forestry has cleared 18 projects of Coal India. Once operational, these mines will add 21 million toone to Coal India's production annually.