Coal news and updates

Ficci designs model for commercial coal mining

Industry body Federation of Indian Chambers of Commerce and Industry (Ficci) has designed a strategy for commercial mining and sale of coal. With the amended Coal Mines (Special Provisions) Act, 2015 being passed in Parliament, mining and sale of coal is open for private companies as well.

The coal ministry, mulling over awarding coal blocks for commercial mining and sales to states on the lines of allotment of mineral mines, is moving in this direction. Ficci has collated legal and technical provisions from the Coal Mines and Mines & Minerals (Development & Regulation) Acts.

Coal ministry officials along with Ficci and all possible stakeholders will hold a discussion on the same on Tuesday this week.

Senior officials said views from across the industry would be accommodated in the final plan for commercial mining of coal and the discussion on the same would be an open house platform.

In the draft model, reviewed by Business Standard, two options for bidding have been suggested. Transparent e-auction of prospective licence & mining licence for non-producing mines and only mining licence for producing mines.

The pricing model suggested by Ficci follows the similar pattern as was for auction of cancelled coal mines for specified end use. The price of a mine to be decided by annual production with price benchmarked at Coal India rates. The highest initial price quoted to be the floor price - over and above of which the bidding would happen. "The bidders to quote production-linked payment as revenue share and payment to be linked to the year-on-years annual production as per mining plan," said the report.

The capability of data acquisition and geological modelling, preparation of geological reserve report and mining plan should be the prime criteria for selection of the bidders, said the eligibility norms in the report. Other criteria are financial strength of the bidder, technical capabilities to mine and adherence to environment and social safety.

Regarding commercial sale of coal, the report recommends the transaction platform model of the Coal India's online auction system. Under this system, all buyers and sellers are registered with the platform and electronic tracking of all transactions is possible.

"The price of sale of coal to regulated (power) sector should be as per Coal India's notified price and for unregulated the price should be the one determined under the fuel supply agreement with CIL," said the report. The report argues that imported coal should also be offered on the same platform for price pooling.

Among other things, it emphasises the role of an independent regulator which should monitor the performance, inter-party relationship, transfer of rights, etc.

Through the new Coal Mines Special Provisions Bill, the government has added enabling provisions in the Coal Mines (Nationalisation) (CMN) Act, 1973 and the Mines and Minerals (Development and Regulation) Act 1957 to allow commercial mining.

In earlier communication with Business Standard, coal ministry officials said they will allot non-operational mines to state governments for commercial mining and sale of coal for end use in the iron, steel, cement and allied sectors. This will bring business and revenue to coal-rich states, which have so far received only royalty from private companies mining coal for captive use.

BLUEPRINT FOR BLACK GOLD

    Commercial mining and sale of coal is now allowed under the new Coal Mines (Special Provisions) Act, 2015
    
    Post auction of cancelled coal mines for end use, the government now mulling to award mines for market sale of coal
    
    In first step, states might get coal blocks for sale to specified end use
    
    Ficci designs model for executing commercial mining, coal ministry to discuss same with other stakeholders
    
    An open house discussion with industry, government officials and allied stakeholders on Tuesday
    
    The coal ministry to accommodate all opinions on commercial mining

source: http://www.business-standard.com