New Delhi | Sept. 13, 2016:

The government is working on a new coal policy, which will allow captive mine owners to sell surplus output. The policy is expected to be firmed up in a series of meetings to be held this month, officials said.

After auctioning captive coal mines to companies in power, steel and cement sectors, the government feels that it is necessary to allow mine owners to offload excess production in the open market to keep the mining projects viable.

"We find that there is excess production of coal in many cases as steel is a cyclical industry and in many cases electricity generation from a new project has either not taken off or is nowhere near rated capacity. This excess production is needed by other firms, which have not managed to get coal mines. Consequently, it is coming into the market but through dubious means," top officials said.

Mines often report alarmingly high levels of washery rejects that are allowed to be sold, officials said. "It is better to bring this into the open market, making the process transparent."

The government will, however, put in a rider that coal sold in the open market by the miners will have to be washed and cleaned to certain degree, in line with the country's global environmental commitments to be a user of "cleaner coal".

The government avers that sale of coal by private captive mine owners will encourage foreign investors to take up stakes in their projects many of which have been stuck because of the lack of clearances or funds.

Officials estimate that the decision will put 110 million tonnes (mt) of coal in the market, ending the country's dependence on imports. Imported coking coal accounts for two-thirds of the total consumption by the steel sector. India imported 43.5mt of coking coal last year, with domestic production at just 11.8mt.

The government has been working on a policy to encourage coal washeries to ensure cleaner coal for the power and steel sectors.

(Source: http://www.telegraphindia.com/)