India defers coal block allocations

KOLKATA (miningweekly.com) – The Indian government has indefinitely deferred the allocation of coal blocks for commercial, noncaptive coal mining.

The government did not provide reasons for deferring the allocation and did not announce a new timeframe, barring a statement that a new schedule would be “informed shortly”.

The government last month started the process of inviting applications from provincial government-controlled and -operated mining companies for the allocation of eight coal blocks for commercial, noncaptive mining.

Companies would have had until May 31 to submit applications before the application process opened on June 1 for processing by the nomination committee. The final award of the blocks had been slated for July 19.

The process would have ushered in the country’s maiden opening up of commercial coal mining.

The allocation of eight coal blocks on nominated basis had been planned as the first stage of opening up the coal mining sector wherein provincial government-owned and -operated miners would be permitted merchant sale of coal without any end-use stipulation. However, at this stage private miners had been kept outside the coal block allocation process.

In December last year, the government scrapped the auction of nine coal blocks citing poor response from bidders and adverse market conditions. The nine coal blocks had received 15 bids with three blocks receiving three bids each, which the government considered as a poor response and that bid amounts would not reflect the true valuations of the assets.

While in the present case, the government had not officially declared any reasons for deferment of allocation, senior officials said that there had been a number of issues taken into consideration. They cited that, unofficially, many of the provincial government’s mining entities had developed cold feet in securing new coal blocks at a time when their own balance sheets were stressed and hence would be prevented in committing investments in developing the blocks.

At the same time, given the current surplus of coal availability in the country and even mining behemoth Coal India Limited facing problems of plenty with rising stocks of 58-million tons, smaller provincial level miners would face an uphill task in finding takers for merchant sales of coal.