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Government plans to hold exclusive coal auction likely for steel, cement plants

The government plans to hold an exclusive round of coal mines auction for steel and cement plants, considering a huge demand supply gap for coal.

The coal ministry could offer about 12 coal blocks in the next round of auction to the two sectors classified as unregulated, government officials said. “We are considering if we can meet the demand of steel and cement sectors first this time. We did not realise that there is so much demand for coal in the unregulated sector,” a senior coal ministry official said. “So far, power sector was our priority. But the sector is already getting 75% of Coal India supply and has been getting priority so far in mines allocation,” the official said.

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In the first two auction rounds, when coal blocks were offered simultaneously to the regulated power sector as well as unregulated sectors, aluminium and cement companies won most of the blocks that were earlier attached to steel plants.

Steel plants, which collectively owned 83% of the coal reserves present in the 31 auctioned blocks, now hold just 32%. Prior to the auctions, aluminium plants had 1% of the coal reserves; they now own 36%. Coal reserves with cement companies have doubled to 33% from 16% earlier. Experts said this has happened because the government clubbed three different industries under one category of end-use, called the “unregulated sector”, while power plants, where the output price is regulated, were offered a separate set of mines with different rules.

For example, Hindalco Industries has bagged three mines that earlier belonged to Monnet Ispat & Energy, Jayswal Neco and Nilachal Steel. The company has won Gare Palma IV/5 coal block at .`3,502 per tonne and another Gare Palma IV/4 at .`3,001 per tonne, inching close to imported coal prices.


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