Economy

Coal mine auctions close with significant variation across winning bid prices

Twesh Mishra New Delhi | Updated on November 15, 2019 Published on November 14, 2019

 

The auction of coal mines under the eighth, ninth and tenth round has come to a close with winning bid prices reflecting the significant variation.

The highest winning bid amount from among all mines bid out, at ₹1,674 per tonne, has been quoted for the Jamkhani coal mine in Odisha by Vedanta Limited. Prakash Industries’s winning bid, at ₹1,100 per tonne, for the Bhaskarpara coal mine in Gujarat has got the second-highest winning bid amount. There is a steep fall from these two exceptionally sought after mines with the winning bid amounts ranging between ₹154 to ₹230 per tonne for all the other mines auctioned.

Commenting on the differences in winning bid price, Kameswara Rao, partner at PricewaterhouseCoopers (PwC) India said, “The bids are generally lower due to improved supply situation. The differences too are largely cost-reflective. The cost of underground mines and the smaller mines is high, and so the bids received are lower.”

None of the mines offered under the ninth tranche could attract an adequate number of bidders.

In total, the Ministry of Coal was able to auction six out of the 27 coal mines it intended to bid out in these three rounds. All the coal mines that found bidders have been earmarked for the unregulated sector, this means that any industry can bid for these mines.

Birla Corporation Limited has won two mines (Brahmapuri and Bikram) in these rounds. Powerplus Traders Private Limited, Jindal Steel And Power Limited, Prakash Industries Limited and Vedanta Limited have won one mine each.

Prakash Industries said that the coal from the Bhaskarpara mine will be used in the company’s Integrated Steel Plant at Champa in Chhattisgarh. For Vedanta, the Jamkhani coal mine would be handy for operations of the company’s nearby Jharsuguda aluminium smelter.

The Ministry of Coal is now gearing to conduct another round of mine auctions but will be further relaxing the bid guidelines. Measures being considered to attract more investment in the coal mining sector include having larger coal mines and allowing the auction of mines with less than three bidders.

One of the reasons for disinterest in the rounds that just concluded could be expectations from commercial coal mining, the auctions for which are projected to begin from December 2019.

 

 

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Published on November 14, 2019
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