The Ministry of Coal (MoC) has made a proposal to bring abandoned mines of Coal India Ltd (CIL) back into operation by outsourcing these through a bidding process on revenue sharing basis.
The abandoned mines are the ones with sufficient mineable reserves at suitable depths, and which had been previously mined to extract coal. However, these were closed as operations had become economically unviable due to difficult geological conditions.
As per the proposed scheme, the concerned CIL subsidiary would select a mine operator through a transparent bidding process, where the bidder will have freedom to sell the coal at market determined prices.
As with commercial mining auctions, the bid criteria will be based on a revenue-sharing mechanism. This means revenue generated from the coal produced will be shared as the bid percentage of the coal value quoted by the bidder.
Distribution of responsibilities
The mine operator will be responsible for reopening, developing, and operating the closed mines, as well as excavating and extracting coal, for the entire duration of the mine’s life or as specified in the contract.
The bidder will also be accountable for paying taxes/royalty/land rent etc, over and above the coal price.
On the other hand, various statutory permissions for opening of such mines, ie, environment clearance (EC), forest clearance (FC) etc will be on the account of the CIL subsidiary. Besides, pre-existing liabilities towards mine closure and any statutory dues will remain with the subsidiary company.
Benefits
Re-operationalizing of the abandoned mines will lead to an efficient way to increase coal production as most of these already have FC, EC and other approvals, which may be revived without the need for going through the entire process again.
This would also prevent illegal mining, frequent accidents and unauthorized encroachments of coalmine land.
Most importantly, it will promote optimum utilisation of the existing coal resources by bringing in much-needed efficiency through lower overhead expenses and state-of-the art technology, allowing coal to be produced at commercially viable rates.
As a first step, CIL and its subsidiaries have identified 10 abandoned coal mines having reserve in excess of 20 mnt that could be put up for sale. Subsequently, more such mines will be identified and added to the list when the auction process is officially finalized.
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