Path cleared for easier coal and mineral mining

Coal ministry looking at also allowing states to mine and sell themselves

One of the major initiatives of the National Democratic Alliance government has benefited mineral-rich states through laws on mining coal and other minerals.

The Coal (Special Provisions) Bill, 2015, opened coal mining for the private sector, and the Mines and Minerals (Development and Regulation) Amendment Act, 2015, tried to boost the mining industry and make it transparent.

The mining industry in India has been going through a slowdown for several years due to a tepid market and legal hurdles. Empowering state governments to conduct mining is likely to give the industry a breather.

The coal ministry is taking due credit for the auction of some of the 204 coal blocks whose allocations over two decades were cancelled by the Supreme Court last September. The auction of 40 operational coal blocks will earn coal-rich states Rs 2.85 lakh crore in 30 years.

But problems could surface after three years. Power developers bid zero and even negative for the coal blocks. No commodity can be priced negative, experts point out. The coal market will be unstable if there is no cost and profit balance.

The coal ministry is now thinking of allowing states to mine and sell coal. This will be a big step towards commercial mining, which is a monopoly of Coal India and Singareni Collieries. Given the regulatory hurdles and legal challenges involved, private players are wary of entering the coal mining business.

The mines ministry is designing a transparent method for allotting mines. Unlike coal, mineral auctions will be conducted by state governments. But bidding will not start anytime soon because states have just begun to collect data on mineral deposits.

The world will have its eyes on India if it can pull it off mineral auctions. "Most mineral-rich countries like Canada and Australia follow the first-come first-served model," said an executive with a steel company that is planning to bid for iron ore.

Apart from new rules, the government is working on a tax regime for minerals. The import and export duty on minerals like iron ore must align with the NDA's "Make in India" initiative.
EMPOWERING STATES

• Government has brought new laws to boost coal and mining sector respectively
• State governments to conduct auction for non-coal minerals
• Some of the coal blocks - which were cancelled by Supreme Court - have been successfully auctioned
• Problems could surface after three years as power companies have bid zero and even negative for coal blocks