The Union Cabinet had approved an ordinance that would make the process of auctioning coal mines easier. The Cabinet approved promulgation of Mineral Laws (Amendment) Ordinance 2020 to amend the Mines and Minerals (Development and Regulation) Act, 1957, and the Coal Mines (Special Provisions) Act, 2015.
According to Coal Minister Pralhad Joshi, the government plans to promote foreign direct investment in the sector by removing restrictions and eligibility criteria for participation in coal block auctions. It would allow companies that do not have coal mine operations in India to also participate in coal block auctions. He said “Previously, there was a restriction that anybody, to participate, should have the coal mine operation in India. That restriction we are removing,”. He added that the end-use restriction had led to “comparatively less” participation in the coal block auctions. Of 204 coal block allocations canceled by the Supreme Court in 2014, only around 29 had been auctioned, he said.
“These amendments will open up a new era to the growth in coal and mining,” said Joshi.
In August, the government allowed 100 percent Foreign Direct Investment in coal mining for open sale under the automatic route.
CII president Vikram Kirloskar said that the opening up of the coal sector without end-use restrictions will also boost both production and mining efficiency, besides substituting import of coal worth approximately Rs 30,000 crore. He further added that the Ordinance also provides for composite prospecting licence-cum-mining lease for coal and lignite blocks. This provision was previously not applicable to coal mines, he said.
“Allowing commercial mining of coal will ensure assured coal supply, accountable allocation of coal and affordable fuel leading to affordable electricity prices for consumers,” said Kirloskar.
Joshi said that the government aims to curb imports of coal through these amendments and encourage the use of the country’s coal reserves, which had earlier been available only for the captive use of the steel and power industry and although India is the fourth largest resource in the world, it imported 235 million tonnes of coal last year.
Of this, 135 million tonnes could have been substituted with domestic reserves, according to him. “The total cost of that is Rs 1.71 lakh crore,” he said.
He added that “adequate” coal blocks have been allocated to Coal India, a major player in this sector. The government has given it a target to achieve a billion tonnes by 2023-24.
Oil and Steel minister Dharmendra Pradhan said that the amendment to the Act was required to build confidence among bidders participating in the auction of 46 operational iron ore mines whose leases expire in March 2020. The government expects to attract investments from Indian and global corporates, besides mining majors such as Peabody, BHP Billiton, and Rio Tinto, etc.
