Smaller mines, cut in upfront fee to lure coal bidders likely

Govt may also carve out dense forests from blocks before auction as mining interest wanes

- Rituraj Baruah, Subhash Narayan

With investor interest in commercial coal mines declining due to demand saturation and land acquisition problems, the government plans to offer smaller mines and carve out dense forests from the blocks to be put on auction.

Two people aware of the developments said that if required, the government may also look at further lowering the upfront payment for taking up mining leases, especially in case of larger mines.

“Economic viability is a primary reason for the lack of interest among companies for some blocks. Land acquisition in densely populated areas is also a concern along with the difficulty in getting clearances in areas which have dense forest," said one of the two persons mentioned above.

The second person said most of companies vying for mines under auctions so far have been large steel and power companies which have captive consumption needs. Now, their appetite for more mines is largely saturated as they already possess fuel sources for their captive needs.

However, the person added that the sector has witnessed a rise in smaller companies, which is why the plan to offer smaller mines is being considered.

The consideration to further relax the requirements and offer smaller mines comes amid a general decline in interest in commercial coal mine auctions.