More new players enter commercial coal mining on Day-4 of auction

The two mines on offer today were both picked up by first-time bidders

More new companies emerged as highest bidders on the fourth day of the commercial coal mining auction on Thursday. While Ranchi-based Fairmine Carbons bagged the Rajhara mine in Jharkhand, Sahapur East mine of Madhya Pradesh went to Chowgule & Company, a Goa-based shipyard firm.

Fairmine Carbons, which was formed in July this year, quoted the highest closing bid of 23 per cent premium on the revenue share to the mine-bearing state. According to corporate submissions, the company manufactures coke, refined petroleum products, and nuclear fuel. 

For the Sahapur East mine, Chowgule & Company bid 41 per cent premium on the revenue share. The company’s website says: “From as early as 1951 as builders, operators and repairers of large river fleets and with the experience and expertise to build a gamut of maritime vessels, the yard has pioneered the construction of all types of ocean-going vessels.”

The bidding is part of the Centre’s first effort to award coal mines for commercial mining and sale to private companies. The government amended the Coal Mines (Special Provisions) Act, 2015, in May to open the auction for non-mining, MSMEs and foreign companies. However, no foreign companies placed any bid.

The two-part auction began last month when companies submitted technical bids consisting of eligibility and initial price offer for 19 of the total 38 coal blocks on offer. The auction received a lot of interest from smaller and non-mining companies. 

Among the winners are several new names such as Aurobindo Realty, Yazdani International, JMS Mining, and Boulder Stone Mart. 

According to the auction methodology, the bid parameter is on ‘revenue-share’ mode. The companies bid for a percentage share of revenue payable to the state government from the production and sale of mined coal. The floor price is kept at 4 per cent of the revenue share. The firms place bids in multiples of 0.5 per cent of the revenue share till it reaches 10 per cent and, thereafter, in multiples of 0.25 per cent of revenue share.