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Government calls off fourth round of coal block auctions

Slowdown in the steel industry has hit coal block auctions, with the coal ministry cancelling the fourth round till market conditions improve.

The nine coal blocks kept aside for auction to the steel, iron and aluminium industries received low bids, leading to the cancellation.

Coal ministry officials said increased supply and a slump in prices were responsible for the low bids.

The coal ministry had earmarked nine blocks for auction and received 15 bids. In two blocks, there were three bids and in two others there were less than three bids.

"We will wait for the market to improve and then offer the coal blocks. The bids have not been strong enough to go ahead," said Anil Swarup, secretary, ministry of coal.

The steel industry, however, said the blocks were not attractive enough and with imported coal prices coming down it was cheaper to source that.

"There was nothing worth fighting for. Why would anyone bid for an Indian mine where only 20 per cent of the mined material is coking coal and the rest a byproduct?" said an executive with a steel company. He also said India had a few good coking coal mines and the output of the others was poor.

Compared to 2013-14, when imported coal prices had shot up, in 2015-16 international coal prices declined as much as 40 per cent. Australian coal is down to $44.82 a tonne from $84 a tonne last year. Indonesian coal is down to $34 a tonne from $57 a tonne last year. South African coal saw the biggest slump to $40 per tonne from $72 a tonne in 2014-15.

"International coking coal prices have come down by almost 60 per cent in two years. It was $200 a tonne two years ago. At present, it is $80-85 a tonne," said the executive.

India imports 30-35 million tonnes of coking coal for the steel industry. Around 90 per cent of this comes from Australia. Other countries that export to India in small quantities are New Zealand, Russia, Ukraine and Mozambique.

Source: Business Standard