‘Govt looking at reducing entry barrier in coal mining’

New Delhi: Anil Kumar Jain, Secretary, Ministry of Coal, said on Thursday that the government is looking at reducing the entry barriers in coal mining which will have a spin effect on the GDP growth and the economy. He further added that the ministry is open to all suggestions in this regard and will go to the Cabinet after the consultation series are over.

He was speaking at a Stakeholder Consultation on recently launched Discussion Paper of Ministry of Coal for 'Auction of Coal Mines for Sale of Coal' organised by Ministry of Coal, jointly with FICCI. This was the first of the series of stakeholders' consultations being organised to gain the industry's perspective on the upcoming auction of coal mines for sale of coal. The second roundtable is in the series is being organised on January 28 in Kolkata.

Govt seeks suggestions from coal mining industry

The consultation saw participation from a wide spectrum of industry representatives from Tata Steel, JSW, Sembcorp, Adani, GMR, JSPL, Vedanta, Essel Mining, Caterpillar, Hindalco, Thyssenkrupp, Fometo, ACB, and Sunflag. It was organised with the objective of gaining insights from industry players before formulating guidelines for commercial mining of coal blocks and the concerns of industry in this regard are addressed before the auction for commercial coal mines begins. As the Government looks to open up the coal sector, the Ministry of Coal is looking to engage in discussions with more and more stakeholders so that they are able to refine the methodology for auction of commercial coal mines. Ministry of Coal has targeted to begin the auction of coal mines within fiscal year 2019-20 itself.

Stakeholders need not be concerned: Additional Secretary

Vinod Kumar Tiwari, Additional Secretary, Ministry of Coal, emphasised that the objective of the stakeholders' consultation is to mitigate the concerns of the coal mining industry and enhance the participation in the auction.

Highlighting that there is no true assessment of future coal demand in the country, he stressed on the need to reduce the burden on coal imports. He also highlighted the government's efforts to ensure maximum participation in the upcoming auctions by reducing the upfront payment amount to 0.5 percent, extending the Prospecting Leases (PL)-cum-Mining Leases (ML) contracts and minimum 4 percent revenue share as the floor price for the commercial coal mining auction process. Further, the ministry also asked the stakeholders to share suggestions on which mines they would want to bid for in the first tranche of auctions.

The backdrop

The government had promulgated Mineral Laws (Amendment) Ordinance, 2020 on January 10 to enable wider participation in auction of coal mines by removing the end-use restrictions of the mining blocks. Earlier last year, the government had also allowed 100 percent Foreign Direct Investment (FDI) under automatic route for coal mining activities, including associated processing infrastructure.
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To take this forward, the government is in the process of formulating guidelines for commercial mining of coal blocks. Subsequently, the Ministry of Coal has come out with a discussion paper entailing key terms and conditions of the auction process.