NEW DELHI | Feb 06, 2017: The government expects good response for auctions of coal blocks for commercial mining given the spurt in prices of imported coal and signs of growth in core domestic industries. The coal ministry is likely to initiate the auctions for non-captive coal mines next fiscal after the conclusion of elections in five states.

Prices of imported coal have been rising in the last few months. The prices increased 61% yearon-year in the last quarter on the back of improved demand from China in the last two quarters. The eight core industries grew 5.6% in December with expansion in steel and electricity sectors.

Coal secretary Susheel Kumar has said the coal ministry will kick-start the process to open up commercial mining for the private sector in the next financial year. Of the 25 coal blocks to be allocated in the next financial year, four will be auctioned to private firms for unspecified end-use while 19 other blocks will be on offer for captive coal mining. Two blocks have been identified for allotment to state-run firms, Kumar said last week.

A senior government official said the decision to restart coal block auctions has been taken in view of the rise in imported coal prices and signs of revival in economic activity. The decision is in line with the suggestions of a group of secretaries to Prime Minister Narendra Modi last month to start private commercial coal mining in the country within a year.

The government was forced to annul the last round of captive coal auctions due to 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.

“Imported coal prices have picked up in the last few months. Therefore we expect a good response for coal auctions. We feel that this is the right time to begin auctions for commercial coal mining,” the official said. The coal ministry is ready with framework for commercial coal mining that will be issued for public comments in March after elections in Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur, he said.

The ministry has already identified big partially-explored coal blocks for commercial mining with much larger reserves than the mines bid out to captive miners. 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 Coal Mines Special Provision Act of 2015 provides for opening up commercial coal mining to private entities.

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