Indian Government paves way for Commercial Mining of Coal

As per the recent updates, the Cabinet has decided to amend laws that open up coal mining to firms other than those in the steel and power sectors, clearing the way for the first phase of commercial coal auctions within this financial year.

The amendment has come under Section 11A of the Mines and Minerals Development and Regulation (MMDR) Act that allows auction of coal and lignite mining licences only to companies engaged in iron and steel, power coal washing sectors whereas the companies other than steel and power, and coal washing services firms are barred from bidding for coal blocks.

This change in act will help the country to reduce its dependence upon coal imports. Despite having the world's fourth largest coal reserve, India imported 235 MnT of coal last year, of which 135 MnT could have been met from domestic reserves. Amendment of this clause will also attract investments from Indian and global corporates, besides mining majors such as Peabody, BHP Billiton and Rio Tinto, said an industry participant.

In 2018, the government had allowed commercial mining by private entities. The Centre had set a mining target of 1.5 billion tonnes by 2020. Of this, 1 billion tonnes were to be from Coal India Ltd and 500 million tonnes from non-Coal India sources, in line with the government's push to raise natural resources production to kickstart economic growth. This has now been revised to 1 billion tonnes of coal by 2023-24.

In early December, the Union coal ministry had approved the allocation of five coal mines for the unregulated sector after the auction of the six mines a month ago. The coal ministry had offered 27 coal blocks for auction for the sectors like iron & steel, cement, and captive power plants but received interests for only six coal blocks. The winners of this round of coal block auction have been allowed to sell 25% of the coal produced from the mines offered in the open market.