Coal news and updates

Govt to conduct 3rd round of coal auction in August

After successfully concluding the first two rounds of coal block auctions earlier this year that netted the government over Rs 3.35 lakh crore, the government today said it would conduct the third round from August 11-17, and which will complete on August 31. As many as 10 mines, with total extractable reserves of 356 million tonne, will be put up for auction in this round, all for the unregulated (steel, cement, sponge) sector, coal secretary Anil Swarup said at a press conference. This means the bidding will be conducted on a forward auction basis. Bid documents for each of the 10 mines will be put up online by the government by June 10, the secretary said. He further announced that the government had also accepted a ministerial panel’s recommendation to start auctioning coal linkages (linkages are a commitment by state-run Coal India it would provide a particular amount of coal to a plant). The auction method will help the price discovery process for the crucial natural resource after shifting it away from the current method in which linkages are awarded by a committee. The coal ministry will put up a draft policy on coal linkage auction, to seek public comments, on its website today, Swarup said. All the 10 blocks put up for sale have obtained most clearances, the coal secretary told CNBC-TV18 in an interaction later. While five of the total mines auctioned during the first round have started producing, the schedule II blocks should start in two blocks. “In schedule three, it may take about a year’s time before mining starts,” according to Swarup, The decision to conduct the third round of auctions only for the unregulated sector was because “as per the data available, there is an unmet demand of about 92 million tones” from the sector, he added. Terming the government’s decision to auction coal linkages as “need of the hour”, Sunidhi Securities Metal Analyst Chintan Mehta said that with some companies not winning back their scrapped coal mines during the coal auction, prices in the e-auction had suddenly witnessed a rise. “The mines that are auctioned will take or three years [to come onstream]. Linkage auction comes in as a solution.” With the focus being on the unregulated sector in this round of the auction, Sarda Energy director GD Mundra said it would make available a greater amount of coal for these companies. “As availability improves, in the long term, coal prices will come down,” he said.

source: http://www.moneycontrol.com