Govt approves Ordinance to amend law to ease auction of coal mines

The government approved an Ordinance to ease mining laws that will allow global players to enter the coal sector, Union Minister Dharmendra Pradhan on Wednesday said, terming it "a mother reform in the coal industry". Oil and Steel Minister Pradhan along with Coal Minister Pralhad Joshi said the promulgation of Mineral Laws (Amendment) Ordinance 2020 will pave the way for growth of the coal sector and allow foreign direct investment.

The ministers were briefing the media after the Union Cabinet chaired by Prime Minister Narendra Modi approved the Ordinance that will also do away with end-use restrictions and allow sectors other than power and steel to participate in auctions. "We have taken historic decision by promulgating amendment to the MMDR Act, 1957...These amendments will open up new areas to the growth in coal and mining," Joshi said.

Pradhan said that "this a mother reform in the coal industry". This will lead to growth of the segment, promote ease of doing business, besides "democratisation of the sector by opening the sector for anyone", Joshi said.

The decision will result in "promoting the foreign direct investment in the sector by removing the restriction and eligibility critieria for the participation...it will boost foreign direct investment" the minister said. He said that of 334 non-captive mining leases expiring March 31, 46 are working mines.

The Ordinance will allow auction of 46 iron ore and other mines before March 31, 2020. Though the auction process of these mines have started but this amendment will strengthen the auction process.

The Ordinance will also facilitate the seamless transfer of all statutory clearances. The move holds significance as India has the fourth largest coal resources in the world and has set a target of production one billion tonnes by 2023-24.

Despite this, it has to import coal worth around Rs 1.7 lakh crore last year. "Last year, we have imported 235 million tonnes (MT) of coal out of which 100 MT is non substitutable but still about 135 million tonnes which was substitutable has been imported. The total cost of that is 1,71,000 crore," the minister said.

In the Coal Mines (Special Provisions) Act (CMSP Act), the 204 blocks which were cancelled by the Supreme Court had end-use restrictions. Out of the 204 coal blocks which were cancelled so far, around 99 have been allocated - out of these 29 have been auctioned.

Joshi also said that allocation of coal/lignite blocks for composite prospecting licence cum mining lease has been provided and requirement of previous approval in cases where allocation of blocks was made by the Centre has been dispensed with. The amendment approved on Wednesday will facilitate coal mining to co-exist with the increasing production by Coal India. The large investment will be attracted because of restriction of end-use has been dropped.

Coal India is the largest coal producer in the country accounting for over 80 per cent of the domestic production. The move "will promote ease of doing business for successful bidder. It will ensure the continuity of mineral supply post march 2020 especially the production and suply of iron ore in the country and it will give boost to the exploration and auction of the deep-seated minerals like gold and diamond in the country," Joshi said.