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Govt looking at reducing entry barrier in coal mining: Coal Secretary

Jan 23, 2020

Stakeholder consultation on auction of coal mines for sale of coal


NEW DELHI, 23 January 2020: Mr Anil Kumar Jain, Secretary, Ministry of Coal, Govt of India, today said that the government is looking at reducing the entry barriers in coal mining which will have a spin effect on the GDP growth and the economy. He further added that the Ministry is open to all suggestions in this regard and will go to the Cabinet after the consultation series are over.


He was speaking at a Stakeholder Consultation on recently launched Discussion Paper of Ministry of Coal for 'Auction of Coal Mines for Sale of Coal' organized by Ministry of Coal, Govt of India, jointly with FICCI. This was the first of the series of stakeholders' consultations being organized to gain the industry's perspective on the upcoming auction of coal mines for sale of coal. The second roundtable is in the series is being organized on 28th January at Kolkata.


Mr Vinod Kumar Tiwari, Additional Secretary, Ministry of Coal emphasized that the objective of the Stakeholders��� consultation is to mitigate the concerns of industry and enhance the participation in the auction.


Highlighting that there is no true assessment of future coal demand in the country, he stressed on the need to reduce the burden on coal imports. He also highlighted Government's efforts to ensure maximum participation in the upcoming auctions by reducing the upfront payment amount to 0.5 percent, extending the Prospecting Leases (PL) cum Mining Leases (ML) contracts and minimum 4% revenue share as the floor price for the commercial coal mining auction process. Further, the Ministry also asked the Stakeholders to share suggestions on which mines they would want to bid for in the first tranche of auctions.


Mr Dilip Chenoy, Secretary General, FICCI appreciated the Ministry's openness to receive suggestions on commercial coal mining. Commending the bold step of Ministry of Coal to open up the sector, he said that this should help take us to a regime where the needs of the economy for coal are met.


Mr Prabir Neogi, Chairman, FICCI Power Committee and Chief Adviser, Corporate Affairs, RP-Sanjiv Goenka Group highlighted that the concept of commercial mining took its roots in FICCI before it became a law in the form of Amendments to Coal Mines Special Provisions Act as well as MMDR Act. After it became a law, FICCI was the first industrial body to hold wide stakeholders consultations on the subject. He also added that it is very encouraging to see that the efforts of FICCI have fructified in the form of a Discussion Paper for Auction of Coal Mines for Sale of Coal.


Government had promulgated Mineral Laws (Amendment) Ordinance, 2020 on January 10, 2020 to enable wider participation in auction of coal mines by removing the end-use restrictions of the mining blocks. Earlier last year, Government had also allowed 100% Foreign Direct Investment under automatic route for coal mining activities including associated processing infrastructure.


To take this forward, Government is in the process of formulating guidelines for commercial mining of coal blocks. Subsequently, Ministry of Coal has come out with a Discussion Paper entailing key terms and conditions of the auction process.


The consultation, which has participation from a wide spectrum of industry representatives from Tata Steel, JSW, Sembcorp, Adani, GMR, JSPL, Vedanta, Essel Mining, Caterpillar, Hindalco, Thyssenkrupp, Fometo, ACB, and Sunflag, was organized with the objective to gain insights from the industry players before formulating guidelines for commercial mining of coal blocks and the concerns of industry in this regard are addressed before the auction for commercial coal mines begins. As the Government looks to open up the coal sector, the Ministry of Coal is looking to engage in discussions with more and more stakeholders so that they are able to refine the methodology for auction of commercial coal mines. Ministry of Coal has targeted to begin the auction of coal mines within this fiscal itself.


This is as part of the larger objective of ensuring maximum participation from the domestic as well as global players in the upcoming auctions of commercial coal mines.


Mr Anil Kumar Jain, Secretary, Ministry of Coal addressed the gathering along with Mr Vinod Kumar Tiwari, Additional Secretary, Ministry of Coal and Mr Rajesh Kumar Sinha, Joint Secretary, Ministry of Coal. Other officials from Ministry of Coal were also present. Also present on the occasion was Mr  Shekhar Saran, CMD, CMPDI.


The Roundtable witnessed participation of the Mining Companies, Power Developers, Mine Developers and Operators (MDOs) and Financial Institutions who shared their perspective on the proposed methodology for the upcoming auctions of coal mines for commercial mining.