Global firms may get to mine coal commercially

Foreign companies with units or joint ventures in India may eventually be allowed commercial coal mining in the country that is estimated to contain the world’s fifth-largest coal reserves.

Foreign companies with units or joint ventures in India may eventually be allowed commercial coal mining in the country that is estimated to contain the world’s fifth-largest coal reserves.

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The Coal Mines (Special Provisions) Ordinance 2014, signed by President Pranab Mukherjee on Tuesday, states that such joint venture companies “may carry on coal mining operations in India in any form either for own consumption, sale or any other purpose … selected through auction by competitive bidding….,” virtually lifting controls in the controversy-marred sector.

At present, only steel, power and domestic cement companies are allowed to own mines for their own use. But the Ordinance, which the Union Cabinet ratified on Monday, could allow commercial use of mines, a move that would enable private companies to get into trading coal.

It will also likely open up the doors for entry of companies such as BHP Billiton, US firm Peabody and Rio Tinto.

India’s estimated coal reserves now stand at 301 billion tonnes, the fifth-highest in the world, but companies still have to import as large number of mines remain unused.

More than half of India’s power is produced from coal. State-owned Coal India Ltd accounts for 80% of the country’s coal output, but it isn’t enough to meet India’s rising energy demand

India’s coal imports jumped more than three times in the last eight years — from 41.2 million tonnes in 2005-06 to 140.6 million tonnes in 2012-13.

The Ordinance also lays out the broad legal framework to give coal mines to private steel, power and cement companies through transparent bids.