Hindalco, Jindal shares surge on govt decision to auction coal blocks

The new auction-based system will replace the earlier controversial policy of allotting coal blocks based on recommendations of a panel of bureaucrats, which the Supreme Court had struck down last month as arbitrary.

A day after the government decided to e-auction coal block allocations, shares of power and steel companies surged.

While Jindal Steel and Power Ltd gained 7%, while Hindalco Industries Ltd was up 2.2% in early trade on Tuesday.

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The new auction-based system will replace the earlier controversial policy of allotting coal blocks based on recommendations of a panel of bureaucrats, which the Supreme Court had struck down last month as arbitrary.

The court had cancelled 214 blocks allotted since 1993, a move that threatened a nascent economic recovery.

Currently only steel, power and cement companies are allowed to own mines for their own use.

But in the future there could be commercial use of mines, a move that would enable private companies to get into trading coal and break the monopoly of public sector monolith Coal India.