CIL to rope in foreign miners

Public sector coal major, Coal India Ltd (CIL) would offer its existing mines to foreign mining companies on lease.

The idea was to allow foreign miners interested in extracting coal reserves to exploit existing mines.

"CIL will float international tenders in the next two months and would offer mines at Rajmahal in the initial stage," P C Parakh, secretary of the central department of coal, told Business Standard at the sidelines of Indian Mining and Machinery Exhibition 2004 (IMME 2004) in Kolkata today.

If the Rajmahal effort was a success, CIL would offer other mines to foreign companies for extraction.

Sources close to the development said that the technology brought in by foreign mining groups would lead to increased coal production in the country and lessen the demand-supply gap in the domestic market. The Indian coal market was expected to see a vast demand-supply gap.

The government recently revised its coal production targets upwards for the 10th and 11th Plan periods.

These companies would be allowed to manage and extract coal from these mines on commercial terms. Parakh said the ministry was contemplating a system of sharing profit and loss arising from mining operations with equipment suppliers.

Equipment and machinery suppliers would have to quantify the efficiency of equipment supplied in terms of production volumes. If CIL extracted more than the quantified volume the suppliers would receive some incentives.

If on the other hand the equipment failed to deliver the quantified volumes suppliers would be penalised through reduction of payments to be made.

This would be possible because payment to equpiment suppliers was generally made over a period of time, similar to any hire purchase agreement."CIL is planning to implement this to enhance production in an assured manner," he added.

Meanwhile, CIL has failed to bag the mining lease for coal blocks offered in Mozambique recently. It bid again for the second set of mines to be offered in that country.