Coal Ministry launches auction process of 40 new coal minesCoal Ministry launches auction process of 40 new coal minesAfter successful auction of 28 coal mines in the first two tranches, the Ministry of Coal has launched the auction process of 40 new coal mines (21 new mines under CM(SP) Act and 19 new mines under the Tranche 3 of MMDR Act).

With coal mines rolling over from previous tranche, there will be a total of 88 coal mines on offer.

Total geological resources of about 55 billion tonne of coal are on offer from these 88 mines, of which 57 are fully explored mines and 31 are partially explored mines. There are four coking coal mines on offer.

The mines are spread across 10 coal bearing states of Jharkhand, Chhattisgarh, Odisha, Madhya Pradesh, Maharashtra, West Bengal, Andhra Pradesh, Telangana, Arunachal Pradesh and Assam.

From this tranche onwards, the Ministry of Coal has introduced provisions in the Agreement related to (i) sustainable mining operations, including mine closure (ii) Mechanised evacuation of coal and (iii) surrender of coal mine by successful bidder upon encountering difficult mining conditions.

The list of mines has been finalised post detailed deliberations and mines falling under protected areas, wildlife sanctuaries, critical habitats, having forest cover greater than 40 percent, heavily built-up area, etc have been excluded.

Key features of auction process include introduction of National Coal Index, ease in participation with no restriction for prior coal mining experience, full flexibility in coal utilisation, optimised payment structures, efficiency promotion through incentives for early production and use of clean coal technology.

Further incentives are being contemplated by the Ministry with focus on sustainability.

The Minister also announced that the earlier rebate of 20 percent on the final offer on sale or consumption of coal for coal gasification/liquefaction may be increased.

Moreover, discussions are in progress for incentives for the coking coal blocks. These steps will help in increasing participation of prospective bidders.

A lot of steps have been taken by the Ministry for enhancing the production of coal, like introduction of commercial mining, reduction in payments by bidders, removal of eligibility criteria for participation in the coal block auctions thereby ensuring maximum participation from bidders which will lead to the enhanced production of coal.

The commencement of sale of tender document started from 12 October 2021. The auction will be held online through a transparent two stage process, on the basis of percentage revenue share.

This round of auction will be the 13th tranche of auction under CMSP Act and third tranche of auction under MMDR Act.

SBI Capital Markets, sole Transaction Advisor to the Ministry of Coal for the commercial coal mine auction, had devised the methodology and is assisting the Ministry of Coal in conduct of the auction.

A total of 88 coal mines with cumulative PRC of 282 tonne are on offer of which 35 coal mines are under 13th tranche of auction under CMSP Act and 53 coal mines are under third tranche of auction under MMDR Act.

Out of these 88 coal mines, 40 are new coal mines whereas the remaining 48 coal mines are roll over mines from the earlier round of auctions. The mines on offer are having 57 fully explored while 31 partially explored coal mines. It also includes four coking coal mines.

These mines will help in generating approximately Rs 29,240 crore of annual revenue at PRC. It will also facilitate a capital investment of around Rs 42,304 crore for operationalising the coal mines and provide employment to about 3.81 lakh people.


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