Private companies can mine, sell coal

Ending Coal India's monopoly government opens coal mining to private sector firms

Coal Minister Piyush Goyal said the move will bring efficiency and competition in coal production, attract investments and best-in-class technology including for "safe and efficient mining", and help create more jobs in the sector.

The Union Cabinet on Tuesday ended the monopoly of the state-owned Coal India Limited (CIL) by approving a new methodology for the auction of coal mines and blocks for the sale of coal.

Furthermore, private players, especially foreign firms, will have to factor in forces impacting the coal sector, factors that pose a threat to returns on investments.

"The reform states that private miners can sell or utilize coal in any manner they like", CIL officials told Business Standard.

The government was left with little option but to make enabling provisions in the Coal Mines (Special Provisions) Act, 2015 for allocation of mines by way of auction and allotment to state-owned companies for the sale of coal. "The key features of this step are allowing 100 per cent FDI in commercial mining and the export of coal", the Coal Consumers' Association of India said in a statement. The decision was taken by the the Cabinet Co-mmittee on Economic Affairs (CCEA) under the chairmanship of PM Narendra Modi. Revenue from the auction of coal blocks would go to states, he said.

The proliferation of private coal mining will also severely compromise the rights and safety of the workers deployed in private mining, further withdrawal of all restriction in pricing of coal and their end-use will increase the burden on the people many times, it said.

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The unions feel that allowing private companies to mine the fossil fuel for commercial use will end the monopoly of Coal India Ltd. The move will also create direct and indirect employment.

West Bengal, Odisha, Jharkhand, Chhattisgarh, and Madhya Pradesh are the major coal bearing sates.

Meanwhile, Coal India, which controls more than three-fourth of the country's total output, reiterated its plans to double production to one billion tons by 2020, saying the south Asian nation is one of the largest users of thermal fuel in the coming decade.

With Coal India now routing its supplies majorly to the power sector, the cement and steel plants are bearing the brunt of coal and railway rake shortage.

In September 2014, the Supreme Court had cancelled 204 coal mining leases allocated to the public sector and private companies since 1993 under the provisions of Coal Mines (Nationalisation) Act, 1973.

In order to bring transparency and accountability, the Coal Mines (Special Provisions) Bill 2015 was passed by Parliament which was notified as an Act in March, 2015. Global mining giants like BHP, Rio Tinto, Anglo American and Glencore have been long expressing interest in prospecting coal in India.

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