The company can, on contract, sell these mines, many of which contain good quality reserves, to MDOs. It would produce additional revenue without fresh investment even if the MDOs operate fairly limited quantities ranging from 250,000 tons to 300,000 tons of quality coal per year, executives said.
“These are sunk investments as these mines don’t yield returns any more. CIL has been looking for ways to earn some revenue from them as a large number of these pits, mostly underground, hold premium grade coal,” one executive said.
Initially, 15-20 such mines would be offered, and the number would increase if the response was good, said the company executives.
The development was confirmed by the company’s spokesperson.
Another executive said that tender documents were being prepared for mining to be offered as-is-where-is. MDOs would be selected on the basis of the net cash flow that could be generated from these mines from their production plans.
Coal India was first preparing to reopen abandoned mines in 2011. “We had offered some 15 mines abandoned due to unavailability of suitable technology at the time. The proposal was taken up by Coal India, however, private parties that had shown interest in these pits wanted at least 49% equity stake in them,” said Partha Bhattacharyya, former chairman of Coal India. “There were no such provisions then and stake sale in these mines were not agreed by the government.”
“Technologies have improved in the last few years and the MDO model for abandoned mines could yield results now,” he said.
