The government is considering auctioning big partially explored coal blocks in Odisha, with nearly 10 times the reserves of mines bid out so far to captive miners, for commercial mining.
Setting up a platform where the miners will have to sell the coal is also being explored, sources in the government said. The blocks auctioned so far to private firms have reserves of up to 170 million tonnes. Bigger blocks with about 700-900 million tonnes capacity have been allotted to state-owned power companies, such as NTPC.
“We are exploring putting up bigger and explored blocks under the commercial mining category to attract Indian and foreign companies with good track records. Mines like Chendipada I & II with geographical reserves over 1,800 million tonnes and Mahanadi-Machhakata with around 1,400 million tonnes coal in the Talcher coalfields in Odisha can be considered for commercial use,” a government official said. The Chendipada I and Chendipada II were separate blocks but were combined by the government before the auctions.
Mahanadi and Machhakata were also two blocks, which were clubbed into one. These blocks have been categorised under Schedule-III, meaning non-operational coal blocks for auction for captive use.
The mines are half-explored and the estimates pertaining to reserves are expected to be accurate. The official said the Coal Mines Special Provisions Act empowers the government to modify end use of mines. The government is looking at a model where the successful companies post auction can be given licences to prospect the reserves.
As in case of oil blocks auctioned by the government, the winning companies may be given an option to exit the coal blocks before commencing mining operations if they find the blocks to be uneconomical.
State governments will be bound to grant mining leases to the winning companies. The government is in the process of preparing draft rules for auction of coal blocks for commercial mining as it plans to kick-off the bidding process towards the end of this financial year.
Another government official said the coal ministry is studying a number of aspects for commercial coal mining and these will be discussed at a workshop to be organised by the ministry and industry chamber Ficci on June 23.
The workshop is expected to be attended by various stakeholders in the coal sector, including Indian and foreign mining companies, analysts, and associations to discuss various nuances including auction process of coal mines for commercial use, pricing, disposal and revenue-sharing model.
ET had on May 22 reported the coal ministry has plans to kick-off the sale of blocks for non-captive use by March 2016, has identified coal blocks and started the process of preparing tender documents.