India\u2019s tryst with commercial mining could face a red flag from the industry which is concerned about a regulated market and stiff competition from state-owned Coal India Limited (CIL). As the industry is expecting only smaller mines to be offered by the Centre, it\u2019s likely that the bigger players might give it a miss.<\/p>\n
The Ministry of Coal recently announced that it would offer four coal mines to kick-start private commercial mining and sale of coal. Amendments in the Coal Mines (Special Provisions) Act, 2015, have allowed commercial mining in the coal sector after a hiatus of 42 years.<\/p>\n
Noted players in the coal mining space, which till now have been ‘Mining Development Operators (MDO)’ for CIL, state-owned mines or firms engaged in captive mining, are anxious that the Centre could regulate the pricing and sale of coal.<\/p>\n
Major power and steel companies such as Adani, Jindal, Tata, NTPC, JSW, HINDALCO etc are already in the captive mining space. Adani Mining is also one of the leading MDO in the coal mining industry.<\/p>\n
“Commercial mining and sale would have a different set of challenges, one of them being getting the slew of clearances for land, forest, mining etc. Then, as a miner, I would have to pay levies and taxes, which is a lot of capital investment at a time when there is surplus coal availability in the country,” said a senior executive of a leading steel company.<\/p>\n
He also said that as the pricing would be set by either CIL or its benchmarked rates would be used, the market would still remain regulated. “If I am not allowed to sell at the price determined by me or there is a cap on the sale, the market is not open and there is no level playing field,” said the executive quoted above.<\/p>\n
With CIL ramping up coal production to meet its 1 billion tonnes target by 2020, there is surplus coal available, especially for the power sector. Meanwhile, due to power demand not rising in the same proportion, the excess coal has touched record numbers.<\/p>\n
“If my coal goes in the power sector, there is no surety of payment as it would be demand dependent. In the current scenario, when the power industry prefers backing down power supply than procuring more, demand deficit could plague the payment for the miner as well,” said an executive with a domestic coal mining company.<\/p>\n
A sector expert also noted that the supply of coal to the power sector would be out of the goods and services tax regime so the miner would not even get the input tax credit. “Conducive market is still missing for private miners,” he said.<\/p>\n
Monopolistic competition from CIL, which till date is the only coal miner in the country, could also dampen the spirit of the private sector. “The R&R (rehabilitation & resettlement) policy of CIL is too attractive for the private sector to match. Unless the size of the coal mines is large, hardly any international players would enter the Indian coal mining space. There are already regulatory and non-regulatory hurdles and then the ambiguity over incentives remains,” said Debasish Mishra, a partner at Deloitte India.<\/p>\n","protected":false},"excerpt":{"rendered":"
India\u2019s tryst with commercial mining could face a red flag from the industry which is concerned about a regulated market and stiff competition from state-owned Coal India Limited (CIL). As the industry is expecting only smaller mines to be offered by the Centre, it\u2019s likely that the bigger players might give it a miss. The Ministry of Coal recently announced that it would offer four coal mines to kick-start private commercial mining and sale of coal. Amendments in the Coal Mines (Special Provisions) Act, 2015, have allowed commercial mining in the coal sector after a hiatus of 42 years. Noted […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[131],"tags":[],"class_list":["post-101533","post","type-post","status-publish","format-standard","hentry","category-coal"],"acf":[],"_links":{"self":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/101533","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/comments?post=101533"}],"version-history":[{"count":0,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/101533\/revisions"}],"wp:attachment":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/media?parent=101533"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/categories?post=101533"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/tags?post=101533"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}