COMMERCIAL COAL MINE AUCTION Dawn of A New Era

The month of November turned historic with the execution of country’s maiden auction of coal mines for commercial usage that marked the country’s transition to a liberalised coal sector that promises access to a fuel on demand at competitive prices without bureaucratic hassles and monopolistic attitude.

- Sumit Maitra

Moderate response

The auction, conducted under the shadow of the still raging pandemic and in an environment of economic hardship saw moderate success with 50 percent of the mines – 19 out of 38 – receiving financial bids.

Moreover, few very large mines like Chhendipada, Kurloi (A) North, Machhakata, Brahmanbil - Kardabahal, North Dhadu with average annual production of around 15 mt received one or no bids and hence, were not eligible for being awarded.

The highest premium touched 66.75 percent with average premium at 29 percent.

The average success rate of the previous 10 tranches of coal auctions remained at about 30 percent as only 35 mines could be auctioned, out of 116 mines put on auction during the last 10 tranches.

Majority of 42 companies which participated in the auction, were from private sector with just two PSUs - NALCO and Andhra Pradesh Mineral Development Corporation Ltd – came from the public sector.

Out of these successfully auctioned 19 mines, 11 are opencast, 5 are underground mines and remaining 3 are a mix of underground and opencast mines located in 5 states - Madhya Pradesh, Chhattisgarh, Odisha, Jharkhand and Maharashtra having consolidated Peak Rated Capacity of 51 million tons a year.

More than half are “Nontraditional” players

With the removal of end-use criteria and significant net worth requirement, 65 percent of bidders are “non-traditional” players, meaning these players have no experience of owning or managing or operating coal mines.