The Cabinet on Wednesday approved an ordinance to amend laws to open up coal mining to firms other than those in the steel and power sectors, clearing the way for the first phase of commercial coal auctions within this financial year.

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The cabinet also approved an amendment to the MMDR Act for a smooth transition of iron ore, manganese and chromite mining leases expiring in March 2020. All statutory clearances of the outgoing leaseholder will be transferred to the new leaseholder and the validity period of all clearances will be extended for a period of two years.

Why the amendment?

At present, Section 11A of the Mines and Minerals Development and Regulation (MMDR) Act allows the government to auction coal and lignite mining licenses only to companies engaged in iron and steel, power coal washing sectors. With this, the government wants to open up coal mining to all firms with offices registered in India as less participation had led to less interest in the auction.

The government aims at greater participation in commercial mining of coal and targets 1000 MT coal production by FY23.

A threat for Coal India

The world’s biggest coal miner is staring at a new challenge as the amendment in the laws will increase competition for the company as it opens the door for several firms to participate in coal auction.

State-owned Coal India and Singareni Collieries Company together accounted for 91.6 percent of the total coal produced in the country during FY2017-18.

In 2018, Piyush Goyal, the then Coal Minister, had said private participation is expected to bring efficiency to the coal sector by moving from an era of monopoly to competition.

The auctions are intended to attract global miners such as Glencore Plc, BHP Group, Anglo American PLC and Peabody Energy Corp.

Sajjan Jindal tweeted " Huge reform announced by the Govt on Commercial mining in Coal. This will go a long way in reducing the Coal Imports which is over $15 Billion/year. In today's time when the Oil prices are very uncertain, this decision is path-breaking in making India self-reliant."

Ensuring no iron ore crunch post-March 2020

The second decision made by cabinet today is related to the smooth transition of mining leases expiring in march 2020. The cabinet has approved an amendment to the MMDR act which will allow all statutory clearances to the new leaseholders immediately 2 years time with some riders.

This will ensure raw material supply is not interrupted after march 2020. 334 mines of different minerals are expiring out of which 46 mines are working mines and delay in auction or transfer of lease will impact 60 MT of iron ore production and 9 percent of manganese production and 45 percent of chromite production.

First Published:Jan 8, 2020 6:49 PM IST