Private commercial coal mining in India remains in limbo

KOLKATA (miningweekly.com) - The Indian government is ready to open up coal mining to the private sector after completing the methodology for the auction of blocks. However, the government is unsure when to put its plan into play, due to the adverse business environment.

According to a Coal Ministry official, while the methodology for the auction of coal blocks to private miners was ready for circulation among various stakeholders, and the identified blocks were supposed to be put up for bids in March, the government was wary of the response from investors.

“Opening up of noncaptive coal mining is very much on cards of the government but given the current depressed business climate, domestic and foreign, auction right now is not expected to generate much interest from private miners,” he said.

“Last month the Coal Ministry held several rounds of informal talks with various investors and the sense was that not many would be willing to put in their money at present. So, while opening up of coal mining remains on the cards the time for play is definitely not now,” he added.

As things stood, opening up of noncaptive coal mining would be limited to the auctioning of blocks to various federal and provincial government-owned and -managed mining entities to partially break the near monopoly of mining giant Coal India Limited, the official said.

Mining Weekly Online last month reported that the government would restrict auction of just 12 coal blocks to such government-owned mining companies. This would signal partial opening up of the sector as it would be the first time since the coal mining industry was nationalised in 1973 that miners other than those controlled by the federal government would be permitted to extract coal, although participation of private miners would remain in a limbo.

The official said that coal blocks with much larger proven reserves had been identified for commercial mining by private investors, compared to the 12 to be offered to various government entities, but clearly these projects would remain on paper until business and investment confidence among investors turned around.