The Union government has opened up the mining sector to a great deal of privatization. Although non-coal minerals were available for bidding by the private sector, including foreign players, private companies could only take up coal blocks if they had defined downstream projects where the coal mining could be used.
In addition, the government’s decision to introduce a joint auction of bauxite and coal mineral blocks to enhance the competitiveness of the aluminum industry by lowering electricity costs would reduce dependence on imported coal.
Non-ferrous companies, such as Hindalco Industries and Vedanta, had to buy coal at the auction premium in order to have an uninterrupted supply of coal for their smelters. However, even now that there is a surplus availability of coal, these companies rely on imported coal because of the lack of access to rail rakes, which are given priority to the power sector, leaving those producers with no choice. The thrust, therefore, of the geographical proximity of bauxite to coal mines.
Anil Agarwal-led Vedanta believes that joint auctioning, where a coal mine will be tagged with a mineral mine, will enhance the competitiveness of the segment. “Attaching a coal mine with a bauxite mine, if done in a closer geography, could provide long-term fuel (coal) safety along with cost visibility to an aluminum producer, “said Sunil Duggal, Group Chief Executive Officer at Vedanta. The company has a mine in Odisha, which is close to the Jharsuguda aluminum smelter.
However, the domestic steel industry remained parched in the midst of a series of measures announced for the coal and mineral industries. “There is no mention of any coking coal mining measure, which is a key raw material for the domestic steel industry. Jharia has coking coal reserves in Jharkhand, which can supply the entire demand of the steel industry. Some policy was needed for that too, “said Vinod Nowal, Deputy MD of Sajjan Jindal, JSW Steel.
The Jharia Coalfield has an estimated reserve of 19,4 billion tons of coking coal.
Over the last few years , domestic steel production has increased by 36%, while coking coal imports have increased by almost 65%. The Government plans to introduce a composite exploration-cum-mining-cum-production regime and to offer 500 mining blocks through an open and transparent auction process.
Approximately 54 mineral blocks in nine states were successfully auctioned until 2018-19, according to the Ministry of Mines’ annual report for FY19.
The Government also plans to remove the distinction between captive and non-captive mines in order to allow the transfer of leases and the sale of surplus unused minerals, leading to improved mining and production efficiency, said Finance Minister Nirmala Sitharaman during her speech on Saturday. The Mining Ministry is in the process of developing the Mineral Index. The Union Government also plans to streamline the stamp duty payable at the time of the award of mining leases.
