The financial bid round for the third tranche of commercial mining auctions commenced today with five coal blocks up for grabs on the first day itself.
The round of auction saw intense bidding for the Koilajan block, which fetched the highest ever bid quoted for a block post-introduction of the revenue sharing model.
Historically, buyers have shown greater interest in blocks with lesser coal reserves given the need for long-term capital investment in blocks with larger reserves amid uncertainty over the future of coal. And the case of Koilajan was no different.
The block, located in Assam, having a modest geological reserve of 0.06 mnt, was sold at a final price of 81.5% against the floor price of 16%. The previous record for highest bid was 75.5% for sale of Rauta block in the second tranche.
It is important to note that a total of three participants were in the fray, namely-Assam Mineral Development Corporation, Mahalaxmi Continental and Coal Pulz. In the end, Assam Mineral Development emerged victorious after a late rally that lasted almost eight hours.
Subdued response for remaining blocks
Earlier, the auction process got off to a dismal start as Brinda and Sasai blocks were secured by Dalmia Cements at a nominal bid price of 8% against the floor price of 7%. These are two separate blocks spread across Chatra and Hazaribagh districts of Jharkhand, but the coal ministry had considered sale of both the blocks against a single bid.
Similar response was also seen for the sale of Bijahan coal block located in Odisha, for which a total of 5 bidders were in contention. The block was secured by Mahanadi Mines and Minerals at a final bid offer of 14% against floor price of 10%.
In contrast, Bankhui block, having the highest coal reserves among the lot offered, saw moderate resilience in the bidding process as it was sold at a final price offer of 18%, fetching a premium of 7% over the floor price.
Yazdani Steel and Power won the Bankhui block, edging out the two state-run firms namely Singareni Collieries Company Ltd (SCCL) and Tamil Nadu Electricity Board (TANGEDCO) in the process.
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