Introducing set of reforms to the existing Mines and Mineral (Development and Regulation) Act, the government has recommended sale of half of the coal produced from captive mines.
Earlier, the allocatee of coal mines for specified end use or own consumption were not permitted to sell coal in open market. Later in Feb ’19, provision was made by the Cabinet Committee on Economic which allowed these players to sell 25% of coal production from captive mines at an additional premium of 15% of its final bid price on per tonne basis.
There has been little progress seen in captive coal mining ever since the allocation of coal blocks was cancelled by Supreme Court. Notably, only 29 coal blocks were in operation at the end of FY ’20 which contributed 61.295 mn t coal during the fiscal year accounting roughly 8% of the country’s total production.
The provision not only aims to make these blocks commercially viable but also increase domestic coal availability in order to reduce imports.
Additional charge on mining leases:
In another suggestion, additional amount has been proposed for coal blocks operating on mining leases.
Generally, coal is exempted from obtaining prospecting license or mining leases, as permission for captive mining comes either in the form of an allocation order or a vesting order issued by the central government under the provisions of the Coal Mines (Special Provisions) Act, 2015.
The additional charge to be notified by Coal Ministry would be applied to the government companies whose mining lease has been granted and extended after the MMDR Amendment Act, 2015 for coal produced post commencement of the proposed amendment.
Other important proposals pertaining to mineral blocks include transfer of statutory clearances of expired mining leases, fixation of additional amount for sale of mineral by captive mines and provision of auction of state mineral concessions by central government in case of difficulty faced by the state government.
The draft suggestions have been put forward for comments from various stakeholders before formulating these into an official amendment to the MMDR Act.
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