Commercial coal auction: SC to have final say on who gets Jharkhand mines

The Supreme Court on Friday said the allocation of coal blocks for commercial mining would be subject to its directions. Senior government officials said the court’s order would impact only the mines in Jharkhand, five of which have been offered in the current round of auction.

The interim order comes at a time when the Centre has already awarded 17 out of the 19 mines on offer. “Any subsequent order of licence, lease etc shall be provisional for now, subject to final orders of the court,” a PTI report said quoting the order. 

The matter pertains to the case filed by the Jharkhand government against the Centre's move to auction mining rights for commercial sale of coal. The Centre amended the Coal Mines (Special Provisions) Act, 2015, in May in order to enable coal mining for non-captive use.

The two-stage auction commenced in September when companies submitted their technical bids consisting of eligibility and an initial price offer for 19 out of the total 38 coal blocks on offer. Out of the 19 mines, five are from Jharkhand and out of which four have been bid out already.

 

Among the winning bidders for Jharkhand mines is Hindalco Industries which is the only existing mining company to show interest for mines in the state. The company refrained from commenting on the matter as it remains in silent period ahead of Q2 earnings scheduled for November 10.

A senior industry expert, who participated in the coal auction, said, “Even if the Supreme Court has to extend this to mines in other states, the current bidding round which is going to end on Tuesday will go through as bidders have already participated and cannot back off from the financial round of e-auction.”

He further said any investment in mines would have to wait till the Supreme Court comes up with final order, which could take a month. 

Other winning bidders for the Jharkhand mines are new players – Fairmine Carbons Pvt Ltd, Aurobindo Realty and Infrastructure and the only state-owned participant, Andhra Pradesh Mining Development Corporation (APMDC). The bidders have to quote a percentage share of revenue payable to the state government from the production and sale of mined coal.

Government officials, requesting anonymity, said the auction process would not be impacted by the interim order. “Only two mines are left to be auctioned. There would not be any adverse impact as all due diligence was done before offering these mines,” said the official.

 

The Jharkhand state government filed a suit in the Court listing their reservations against the commercial coal auction. The state government said the auction was in “violation of environmental norms and would cause irreparable damage to environment, forests and land area”. It also cited the Covid-19 impact on the economy and the general slowdown to indicate the auction would not gather deserved price for the mines.

“The impugned auction would encourage and bring in undeserving, collusive, cartelized, restrictive trade practices. Auction of coal blocks at this time will be playing into the hands of the capitalist lobbies at the cost of national interest,” the state said in its petition.

The SC in its interim order also said it could set up an expert committee to examine whether an area near the proposed mining sites in Jharkhand qualifies as an eco-sensitive zone.

“The Central government has done its homework for commercial mining very well and there is no violation of any of the existing environment and forest rules,” said the executive quoted above.