Interest of foreign miners is absent despite government’s focus on getting foreign expertise

Major Indian corporate houses like Adani, GMR, Tata Steel, Dalmia Bharat and CESC, among others have shown interest in government’s effort to open up commercial coal mining. Interest of foreign miners however, is absent despite the fact that the initiative of the government was targeted at getting foreign expertise and capital in the mining.

In a meeting to discuss regulations about opening up coal mining to private and foreign players, representatives of industrial houses like GMR, Hindalco, Adani Enterprises, NMDC, CESC, BGR Mining, Tata Steel, Lanco Infratech, Monnet Ispat, Essel Mining, Dalmia Bharat Cement, JSW Energy have attended the meet to give suggestions on the regulations to be applied to auction of blocks meant for commercial mining.

Other Indian entities were Dilip Buildcon, Rungta Mines, Sainik Mining, VPR Mining, Triveni Earthmovers, Rashmi Group, Montecarlo Ltd, and few others.

However, the foreign miners did not attend the meet. This could be due to the glut in global coal prices, and specifically, some very restrictive clauses in the regulations, sources said.

While private miners would be technically free to decide on the prices of the coal they mine, several experts are apprehensive about an indirect way to protect Coal India, by linking a revenue sharing model with the prices which has to be higher than what the country’s dominant state-owned miner charges for its output, DNA Money had earlier reported after the draft rules came out.

That issue was discussed extensively in the meeting held recently between the private mines and the government, record of the meeting shows.

“Some of the participants observed that linking the revenue share at 1.2 times, the Coal India (CIL)- notified price may not be a desirable proposition. It was stated that CIL price is already on the higher side, and linking the revenue share to CIL price may result in increasing the sale price of coal by the commercial miner, whereas the objective under commercial coal mining should be to make coal available at cheaper prices. It was stated that for auction of other mineral blocks, revenue share is estimated at IBM-notified price itself and no margin is being charged over IBM notified price,” minutes of the meeting says.

Forcing private miners to sell coal at 1.2 times, CIL prices would negate the benefit these mines can derive from the efficient and cost-effective mining techniques which could reduce prices, experts had said.

Meanwhile, the government has started working on the fifth tranche of auction of mines for specific usage.

This time, just seven mines namely Choritand Tiliaya, Rohne, Urtan North, Jogeshwar, Khas Jogeshwar, Rabodih and Brahmadiha, would be electronically auctioned beginning June 13.

Interest of foreign miners is absent despite government’s focus on getting foreign expertise GMR, Hindalco, Adani Enterprises, NMDC, among others attended the meeting.

Source – DNA