Land acquisition for commercial mining may come under coal law of 1957

Under Coal Bearing Areas Act, Centre will acquire land and then give it on lease to miners; SBI raises concerns on offtake, demand of coal from commercial mines

In order to ease the coal mining process for the upcoming commercial coal auction, the Centre is mulling to allow land acquisition under the Coal Bearing Areas Act, 1957. This would entail the Centre acquiring land and then giving it on lease to the miners.

Speaking at a stakeholders’ discussion on commercial coal mining held by Ficci, the nominated authority for coal auction said the Centre can only assist, and that it is the miners who need to persuade the state government for land acquisition.

“The Centre is thinking on an initiative wherein land acquisition would be allowed under the Coal Bearing Areas (Acquisition and Development) Act, 1957 and the land could then be given to private miners on lease,” said M Nagarau, joint secretary, ministry of coal and nominated authority for commercial coal auction.

The Coal Bearing Areas (Acquisition and Development) Act, 1957 provides for the acquisition of land containing, or likely to contain coal deposits and for matters connected therewith. Under the provisions of this Act, the land is acquired for government companies only for coal mining and activities strictly incidental to mining.

The Centre had started the coal mine auction for commercial mining and sale by private companies in June. Bidding terms were liberalised to attract foreign players, non-mining entities and large miners. In May, it amended the Coal Mines Special Provisions Act, 2015, to simplify the auction process and attract significant investor interest.

Several stakeholders asked the ministry of coal about time duration for getting environment and forest clearance. Secretary, ministry of coal Anil Jain said the blocks have prior environment approval. “Environment clearance now takes less time than it used to. I would like to assure that in the next 6-12 months, time taken to get forest clearance might also get reduced,” said Jain.

Prabodh Parikh, Deputy managing director, SBI however raised several concerns regarding the commercial mining which could prevent lenders in funding the coal mining projects. He said while the Centre has made the terms of commercial auction investor friendly, there are still major questions of the offtake of the coal and thereby the validity of such mining projects.

“We have seen in large projects like these that forest and environment clearance takes a lot of time. There have been publicly some concerns on these mines lying in the ‘no-go’ forest areas,” said Parikh.

Centre for Science & Environment in its latest report said “of the 41 blocks put up for auction, 21 feature in the original No-Go list.” The report noted since 2015, of the 49 blocks cleared for coal mining, nine were in No-Go areas. No-Go refers to unfragmented forest landscapes having a gross forest coverage more than 30 per cent and weighted forest coverage more than 10 per cent.

Parikh also said as a lender, the biggest concern is regarding the offtake of the coal from these mines. “In recent years, there has been a significant push to renewable energy in India. As a lender I have to be sure that there will be significant long-term demand for coal from these projects,” he said.

Coal ministry officials said while renewable energy needs to be pushed, demand for coal from several sectors including power, steel and others will continue.

Responding to the queries of several investors regarding the final list of coal blocks as some states such as Chhattisgarh are protesting against the auction, the coal ministry officials said the discussion is going on. “We are in talks with the Chhattisgarh government regarding the five mines in the state which are part of the commercial auction. We will update the final list soon,” said Nagaraju.

Several mine bearing states such as Jharkhand, Chhattisgarh and Maharashtra have opposed the timing of the commercial coal auction citing the Covid pandemic. The coal ministry earlier dropped one mine from Maharashtra after the state said it falls in ‘tiger-zone’.

The online auction of coal blocks for commercial mining and sale for private companies will commence in October and final winners declared in November.