 "Coal India to gain from opening up of mining")
The Coal Mines (Special Provisions) Ordinance, 2014, has inserted a section in the Coal Mines Nationalisation (1973) Act, according to which government companies and private players "may carry on coal mining operations in India, in any form either for own consumption, sale or for any other purpose in accordance with the prospecting licence or mining lease, as the case may be."
The major concern is regarding prices, while CIL is selling coal at 40 per cent less than international prices, the entry of private players might push the prices up. Incidentally, there was a proposal for a Draft Coal Regulator Bill has been discussed several times by the Empowered Group of Ministers (EGoM) during the United Progressive Alliance (UPA) government. The regulatory body might be set up if commercial mining is allowed by private players.
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Till now, private sector entry was allowed for only captive mining. But, the sector has hardly seen any big investment in captive mining, despite having provision for 100 per cent foreign direct investment. Global players like BHP Billiton or Rio Tinto have not seen any keenness for captive mining, depriving the sector new technologies. This, many believe, would change if commercial mining is allowed.
"I believe this is only an enabling provision, though from the wording of the ordinance, it appears the government has already moved forward to open up the sector. It may appear that Coal India is losing its monopoly, but even for the company it will be beneficial," said a director of the miner.
"In the short term, the immediate consequences may affect CIL operation, as I am not sure how the unions will take up the matter," the official added. Unions have already threatened to go on an indefinite strike if India opens up the sector, allowing private miners to sell coal commercially in the market. "We are not aware of the fine print of the ordinance. But we will oppose private commercial mining and go on a national strike along with other unions if the government decides to go ahead with the proposal," said Jibon Roy, general secretary of the All India Coal Workers Federation.
Officials said once these are sorted, the infusion of competition would be in the interest of the company, as it will help increase efficiency, bring modern technology faster. "Anyway mining is time consuming operation, CIL will get at least three to four years to get accustomed to the competition, even if the the sector is opened up immediately," the official said.
However, another CIL official said private players in captive mining have been inefficient so far. "Mining is a difficult job. More than 48 billion tonnes of captive reserves were allotted to private parties, in order to boost up production. Their performance was worse than that of CIL. They faced the same problems in environmental clearances and all. So the case will not be different for private parties unless these operational issues are addressed first."
Former CIL Chairman Partha Bhattacharya, however, allayed this concern. "In captive mining, power and steel companies are doing the mining. If the sector is opened up, manpower and technology specialised in mining will come. This is the way to for India."
"The perception maybe otherwise but CIL is one of the most efficient mining companies worldwide. The production cost of open-cast mining is perhaps lowest in CIL. There is nothing to be apprehensive for CIL. It will benefit from competition," he added.
COAL CONCERNS
- Experts claim that competition will be beneficial for Coal India
- Prices expected to rise with entry of private players