Cabinet removes end use restrictions for participating in coal mine auctions

The cabinet on Wednesday decided to do away with end use restrictions to participate in coal mine auctions.

This is being viewed as a precursor for the commercial coal mining auctions that the centre plans to conduct soon. The cabinet also decided to automatically transfer environment and forest clearances for iron-ore mines being auctioned.

These relaxations were enabled through an Ordinance to introduce Amendments to the Mines and Minerals (Development and Regulation) Act 1957 (MMDR Act) and the Coal Mines (Special Provisions) Act, 2015 (CMSP Act).

"The amendment to MMDR Act will allow for seamless transfer of Environment and Forest clearance in operational mines...the amendment to the CMSP Act will allow bidders that do not have plants to consume the coal to bid for mines," Minister for Coal and Mines, Pralhad Joshi said.

“The CMSP Act had enforced end-use restrictions for the auction of 204 blocks whose leases were cancelled by the Supreme Court in 2014. Now we feel that because of this end-use restriction, the participation in the auction was relatively less. Of the 204 blocks cancelled, so far 99 have been allocated or auction and only 29 have been auctioned. The auction was limited by these restrictions,” he added.

Joshi said that this amendment will help curb imports of coal. “The demand for coal in India is growing and we have imported 235 million tonne of coal last year. Out of this, 100 million tonne of coal cannot be replaced, but around 135 million tonne which was substitutable has been imported,” Joshi said.

He said that this replaceable coal import is valued at around ₹ 1.71 lakh crore.

Joshi said that the Ordinance will also introduce the Composite Prospective and Mining licenses for coal mining in the country.

“A total 334 non-captive mining leases are expiring in March 31, 2020, of these, there are 288 non-working mines and 46 (of which 36 are iron-ore) are working mines. It is being estimated that there may be an iron-ore production shortfall of 16 million tonnes with after the expiry of mining leases,” Joshi said.

He said that with the proposed amendment the MMDR Act, the Environment and Forest clearances will be automatically transferred to the new bidders. “In normal course it could take up to two years to get all the clearances, but the ordinance will allow for (immediate) seamless transfers for mining within the existing areas,” Joshi said.

Commenting on the amendment to the MMDR ACT, Minister for Petroleum and Natural Gas, Dharmendra Pradhan said, “The amendment to the MMDR Act was necessitated to build confidence among bidders participating in the auction of 46 operational iron ore mines whose leases are expiring in March 2020.