The proposal was mooted in 2008. Private sector miners were keen to enter joint ventures with Coal India Ltd (CIL) to reopen abandoned underground mines. But the government failed to take a call then.

Seven years down the line, the State-owned miner has revived the proposal.

According to sources, the company is now drafting a status paper for consideration of the coal ministry.

Though proved unviable to CIL due to high cost of production vis-à-vis low price of the fuel, the mines reportedly have high quantities of extractable reserves of coking (used in steel making) and thermal coal. The company previously identified over two dozens of such mines for redevelopment.

While the coal ministry is yet to consider the CIL proposal, sources say the recently enacted Coal Mines (Special Provisions) Act cleared the legal hurdles in tapping the unutilised resources.

The new act opened doors to private sector participation in commercial coal mining, thereby paving the way for CIL to enter JVs with the private sector in flexible terms.

Flexibility is important in such initiatives, says former CIL Chairman Partha Bhattacharyya, who had lined up 12 prospective partners for reopening the abandoned mines in 2008.

ArcelorMittal role

The idea first struck the Luxembourg-based steel maker ArcellorMittal and its Indian peer Ispat Group. Both companies approached CIL with proposals to strike JVs for reopening two separate abandoned mines in 2008.

CIL decided to select partners through a transparent process. A tender document was prepared for 50:50 participation in 18 abandoned mines. Twelve companies, including ArcelorMittal, Rio Tinto, Titan Mining (Australia), Reliance Natural Resources, Sterlite, JSW Steel, Monnet Ispat, Essar Steel, a JV of SAIL and Tata group and GVK Power, submitted expressions of interest. But the initiative suffered a setback as the private sector wanted its share of the equity coal for captive consumption in India. The prevailing policy didn’t allow it.

Hurdles cleared

“With the recent statutory amendments, I don’t see any problem in reopening the abandoned mines,” Bhattacharyya said.

The possibilities are many. To make the offer attractive, CIL may offer a majority stake to the private sector. The coal produced may be sold through the open market (e-auction) to extract higher returns and justify the high investments in underground mines. The private partner may also take away its equity coal.

“Abandoned mines are not merely idle assets. They also invite problems to the company through illegal mining leading to accidents and underground mine fire. Any option to make it a productive asset is a win-win,” a CIL source said.

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