NEW DELHI | April 06, 2016: The global economic slump has delayed the government's plan of opening the coal sector to private commercial mining, Coal Secretary Anil Swarup has said. The government is not sure whether coal blocks auction for commercial mining will generate adequate interest among mining firms, he told ET.

The government had earlier planned to open non-captive commercial coal mining to private firms by March.

The coal ministry had held two rounds of discussions with private companies in the fiscal year just ended. The ministry has prepared the draft methodology for allowing private companies to mine and sell coal and will seek public comments once the government decides to open the coal sector, Swarup said.

"The government is not sure whether coal blocks auction for commercial mining will generate adequate interest among mining firms," the coal secretary said, adding "the idea behind bids is not to extract a higher value for coal but to have transparency".

The government was forced to annul the fourth round of captive coal auctions due to a poor response from steel and cement firms. Of the nine mines offered in the fourth round, seven received less than the required three bids, while two received just three bids. In total, the nine mines received just 15 bids. The lame response was attributed to increased domestic coal production, slump in international coal prices and financial stress in the steel and aluminium sectors. The coal ministry plans to resume the fourth round of bidding when the markets improves.

The government has already identified big partially-explored coal blocks with much larger reserves than the mines bid out to captive miners for commercial mining. Clubbed mines like Chendipada I & II blocks and Mahanadi and Machhakata are some of the mines that are expected to be earmarked for commercial use.

The government on December 16 allowed state utilities to resume commercial coal mining. The state corporations were barred from mining and selling coal after the Supreme Court ruled in October 2014 that it was illegal.

The Coal Mines Special Provision Act 2015, however, provides for opening up commercial coal mining to private and public entities. On March 20, the Parliament passed the Coal Mines Special Provisions Bill that provides for opening up commercial coal mining to Indian and foreign private firms. So far, Indian companies with end-use plants have been allowed to mine coal for captive purposes.

The Act ends the monopoly of state-run Coal India Ltd in commercial mining and allows private companies registered in India to mine and sell coal.

(Source: http://economictimes.indiatimes.com/)