In an effort to boost coal production in India, the Union Minister of Coal and Mines, G Kishan Reddy, will be launching the 10th round of the commercial coal block auction. This round will offer a total of 60 blocks, located in various states such as Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha, Telangana, and West Bengal. The aim of this auction is to harness the latent coal reserves present in some of the closed and discontinued underground mines.
According to the Ministry of Coal, a total of 161 coal mines have been allocated or auctioned so far with a peak rated capacity of 575 MT. Out of these, 58 mines have received mine opening permission and 54 mines are operational. In the previous year, these mines produced a total of 147 MT of coal, contributing to 15 per cent of the country’s total coal production. This initiative is part of the Commercial coal block auction launched by the Prime Minister in 2020, aiming to enhance coal production and attract private sector participation in the coal mining sector.
Coal India Limited (CIL) had previously awarded 23 coal mines to private sector bidders under a revenue-sharing model, with a cumulative peak rated capacity of 34.14 million tonnes/year and total extractable reserves estimated at 635 MT. The successful bidder for these mines was selected based on offering the maximum revenue to the company, with a minimum revenue share of 4 per cent to be shared. The company highlighted the advantages of this approach, including resource conservation, substitution of imported coal, and livelihood opportunities for local communities.
To further encourage participation, CIL is in the process of identifying additional mines with relaxed bid norms to attract wider interest. The successful bidder or mine operator will take over the mine based on an “as is where is” basis and utilize the existing infrastructure and project facilities without additional payment to Coal India. Additionally, for coal sold exclusively for coal gasification or coal liquefaction, 50 per cent of the contracted percentage of revenue share will be provided to the operator.
The mine operator will be responsible for selling coal mined from these allocated mines at market-driven prices through an auction process on behalf of the authority. They will have the flexibility to choose their preferred technology and deploy mining machinery for coal extraction. Overall, this initiative is seen as an environmentally friendly approach, as it prevents land degradation and utilizes existing mining infrastructure to increase coal production in the country.
