Cabinet to consider auction of 100 non-coal mineral blocks Govt may also allot more than 10 coal mines to PSUs this fiscal for commercial mining

    The Cabinet is likely to consider mines ministry’s proposal to allow auction of 100 mineral blocks for exploration as early as this week as the government tries to revive exploration activity in the country.

    Last month, Steel and Mines Minister Narendra Singh Tomar had said his ministry has identified 100 mineral blocks for exploration, which will be offered to the private sector once the government notifies National Mineral Exploration Policy (NMEP).

    “The mines ministry has sent the proposal for auction of 100 blocks for probing deep-seated/concealed mineral deposits.It is likely to be taken up this week or the next. The government is committed to this as it will give a major boost to exploration in India,” a government official said.

    The ministry has engaged SBI Capital, a wholly-owned subsidiary of public lender State Bank of India, as transaction advisor for the proposed auction.

    The state-owned metal scrap trading company MSTC has been roped in to set up the auction platform.

    One of the important features in NMEP is attractive provisions for private investment in the exploration sector, he added. NMEP proposes that private entities engaged to carry out regional and detailed exploration will get a certain share in revenue (by way of royalty/premium to be accruing to the state) from mining operation from successful bidder after e-auction of mineral block discovery.

    Revenue-sharing could be either in the form of a lumpsum or an annuity, to be paid throughout the period of mining lease, with transferable rights. Selection of private explorer is proposed to be done through a transparent process of competitive bidding through e-auction.

    For this, reasonable areas/blocks for regional exploration will be earmarked/identified by the government for auctioning. Moreover, taking forward its decision to open up the coal sector for commercial mining, the government may allot more than 10 coal blocks to PSUs in the current fiscal for production and sale of the fossil fuel.

    “The coal ministry is planning to allot more than 10 coal mines to PSUs in the ongoing financial year,” a source said.

    The source further said that while some of the coal blocks would be alloted to coal-bearing states, non coal-bearing states, including Haryana and Punjab, will also get a share.

    “The coal ministry would ask for special permission for West Bengal as the Assembly Elections in the state will begin next month,” the official said.

    According to industry watchers, with the allotment of mines to PSUs, the Centre’s monopoly over mining and sale of coal will come to an end.

    An official had said last month that the preliminary exploration in most of these blocks through initial drilling, known as regional exploration, has been done.

    Coal Secretary Anil Swarup had earlier said, “We are preparing groundwork for commercial mining... We are looking at a few mines and the work has been undertaken to identify mines.” For the first time in over 40 years, the government is throwing open the coal sector for commercial mining, which at present is being undertaken by the central PSU Coal India.

    The Cabinet had earlier given its approval to allotment of coal mines to central and state PSUs for sale of coal, mainly to medium, small and cottage industries, under the provisions of the Coal Mines (Special Provisions) Act, 2015.

    The decision is in line with the government’s target of doubling coal production to 1.5 billion tonnes by 2020. Of this, it has fixed a target of 1 billion tonne from Coal India by 2020. Coal India accounts for over 80 per cent of the domestic production and has a target of producing 550 million tonnes of coal this fiscal.

    The government has made it clear that the decision for commercial mining will not impact Coal India.

    It also said commercial mining “will also enhance domestic production of coal to meet growing demand of the economy, potentially cutting down imports”. It had said the coal-bearing states will get additional revenue from such coal mines “equal to the amount of royalty on the quantity of coal produced on a monthly basis” during the lease period/life of the mine as well as one-time upfront payment, which is 10 per cent of the intrinsic value of coal in the mine, in three installments in the first year of allotment.

Millennium Post, Kolkata, March 8, 2016