Industry, players hail govt's decision to further open the coal sector

Jan 10,2020

India Inc hailed the move by the government to further open up the coal mining sector and allow non-coal companies to take part in auctions without restrictions on end-use.

In an effort to attract investment and boost domestic coal production, the Cabinet approved the enactment of Mineral Laws (Amendment) Ordinance 2020 to amend Mines and Minerals (Development and Regulation) Act 1957 and Coal Mines (Special Provisions) Act 2015 to open up coal mining in the country to non-coal companies while removing fuel end-use restrictions.

Industry body CII said the decision of the government to open up the coal sector without end-use restrictions would help boost the productivity of both production and mining.

Vikram Kirloskar CII President said allowing 100 percent FDI in coal mining will help India not only to harness its coal reserves, which were earlier available only for captive use of steel and power but also help many leading foreign players to establish operations in India with their new-age technology in mining.

“This will help unleash another energy source in times of global oil price instability due to the ongoing Middle East conflict. The opening up of the sector without end-use restrictions will also boost both production and mining efficiency besides substituting import of coal worth about Rs 30,000 crore," he said.

During 2018-19, around 125 million tonnes of thermal coal was imported by India, resulting in a forex outgo of around USD 8 billion (about Rs 57,000 crore), CII said.

"The government's decision to do away with end-user restrictions in coal mining is a landmark reform. It shows its intent towards the opening of the coal sector for attracting big-ticket investments.

Ajay Kapur, CEO - Aluminium & Power Business, Vedanta Ltd said, "With this, the government has addressed a key concern of global coal mining companies. We welcome this development and now expect a very positive response to coal mining auctions that are likely in the near future."

Welcoming the move, Ficci said this decision will do away with the leeway provided to only steel, power and coal washeries and open the commercial coal mining bidding for all the firms.

Dilip Chenoy, Secretary-General, Ficci said, "The Cabinet decision will also do away with end-use restrictions of the mining blocks and pave the way for the first leg commercial coal auctions within this fiscal. The move is expected to provide a big push towards efforts for auctioning of coal blocks for commercial sale. It will help attract investments from Indian and global corporations. This is also a major step towards realizing the government's target to completely stop coal imports by power plants by 2024."

Since 214 coal blocks were revoked by the Supreme Court in 2014, only 29 were auctioned due to restrictions on end-users. The changes would eliminate these constraints and boost the country's business facility as well.

The Indian steel industry also welcomed the move with apex steel industry body Indian Steel Association (ISA) saying, "This is a huge reform announced by the government on commercial mining in Coal. This change in Act will help the country to reduce its dependence on coal imports and help attract investments from Indian and global corporations. The step taken today was a long pending reform which will make the domestic steel industry more competitive on a global level. “

JSW Steel Chairman Sajjan Jindal said the move will go a long way in reducing the coal imports.

"Huge reform announced by the government on commercial mining in coal. This will go a long way in reducing the coal imports which is over USD 15 billion/year," he said.

In today's time when the oil prices are very uncertain, Jindal said, the decision was path-breaking in making India self-reliant. JSPL Chairman V R Sharma termed the decision as a 'game-changer' for the industry.

"They are spreading on international platforms that using coal is damaging the environment, which is incorrect. Like we do at our Angul plant which is India's first and largest syngas-based DRI plant and coal gasification plant (CGP) for steel-making," he said.

Jay Cheema, Partner, Cyril Amarchand Mangaldas said: "This is a welcome step by the Government considering India's decelerating gross domestic product growth. The present move will provide impetus to the ease of doing business policy of India and will encourage private companies to foray into commercial mining in the sector, thereby aligning it with prevalent global standards".

Coal Minister Joshi said it was a historic reform and the move will help create an efficient energy market, usher, in competition and reduce coal imports. India's coal sector was nationalized in 1973. The move to amend the law will help India gain access to high-end technology for underground mining used by global miners.

Oil and Steel Minister Dharmendra Pradhan termed the decision as "a mother reform in the coal industry".

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