{"id":66886,"date":"2020-10-19T23:37:12","date_gmt":"2020-10-19T18:07:12","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=66886"},"modified":"2020-11-26T14:04:10","modified_gmt":"2020-11-26T08:34:10","slug":"commercialization-of-coal-mining","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/commercialization-of-coal-mining\/","title":{"rendered":"Commercialization of coal mining"},"content":{"rendered":"<p><strong>Source- <\/strong><a href=\"https:\/\/www.livemint.com\/industry\/energy\/the-uphill-climb-to-liberalize-coal-11603030207632.html\"><strong>Live Mint<\/strong><\/a><\/p>\n<blockquote><p><strong>Syllabus- GS 3- <\/strong>Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.<\/p><\/blockquote>\n<p><strong>Context<\/strong>&#8211; Centre was all set to allow commercial and even foreign players to mine coal from 19th October, with the aim of making India among the biggest exporters of the dry fuel, but announced yet another delay in the process.<\/p>\n<p>Government in March allowed commercial mining operations i.e. mined coal can be sold anywhere and to anyone in the world. It also allowed 100% FDI. But still, the process of bidding has not completed yet.<\/p>\n<p><strong>What provisions does coal Ordinance contain?<\/strong><\/p>\n<ol>\n<li>It allows Coal\u00a0mining by any Company.<\/li>\n<\/ol>\n<ul>\n<li><strong>Earlier:<\/strong> Only those in Power, Iron &amp; Steel and Coal washery Business could bid for Mines.<\/li>\n<\/ul>\n<ol start=\"2\">\n<li>It also\u00a0does away with captive end-use criteria i.e. Coal can be commercially mined and sold to any buyer in an open market.<\/li>\n<\/ol>\n<ul>\n<li><strong>Earlier:<\/strong> The Coal mined by a licensee could be used for only specified purpose like for its own Thermal power plant i.e. they could not be sold in Open market like that of Coal India Ltd (Public Sector Enterprise).<\/li>\n<\/ul>\n<p><strong>What are the advantages accruing from this changed regulatory regime?<\/strong><\/p>\n<ol>\n<li><strong>Expands the pool of Potential bidders-<\/strong>This will lead to better competition during auctions thus fetching\u00a0better revenues for the government.<\/li>\n<\/ol>\n<ul>\n<li><strong>Foreign Direct Investment<\/strong>&#8211;\u00a0The move will\u00a0promote\u00a0FDI\u00a0in the sector.<\/li>\n<\/ul>\n<ol start=\"2\">\n<li><strong>Fixed royalty-<\/strong> Previously, the floor price was a fixed royalty of\u00a0\u20b9150 per tonne, and bidders contested by bidding upwards of this. This time around, the floor price is fixed at 4% of the annual revenue realized from the coal mine.<\/li>\n<\/ol>\n<ul>\n<li>This change from fixed royalty to variable royalty gives miners protection from fluctuations in prices.<\/li>\n<\/ul>\n<ol start=\"3\">\n<li><strong>Import Substitution<\/strong>&#8211;\u00a0The move will boost both production and mining efficiency besides\u00a0substituting import of coal worth Rs 30,000 crore.<\/li>\n<\/ol>\n<p><strong>What are the challenges? <\/strong><\/p>\n<ol>\n<li><strong>Underwhelming response<\/strong>&#8211; No bids have been received for 15 of the 38 coal blocks that are up for auction, continuing the trend of tepid participation.<\/li>\n<\/ol>\n<ul>\n<li>None of the big foreign miners like BHP, Glencore and Peabody are participating, and domestic companies dominate the list of bidders.<\/li>\n<\/ul>\n<ol start=\"2\">\n<li><strong>Lower royalty revenue<\/strong>&#8211; Muted demand for coal due to an economic slump means that auction prices may be depressed. States are already complaining about a possible drop in royalty revenue.<\/li>\n<li><strong>Federal Challenges<\/strong>&#8211; In a writ petition to the SC, Jharkhand has said the Centre\u2019s decision to commence commercial mining process flouts Schedule-V of the Indian Constitution, which refers to the \u2018scheduled areas\u2019 falling under the state government.<\/li>\n<\/ol>\n<ul>\n<li>The suit argued that depressed demand for coal due to the ongoing\u00a0economic slowdown\u00a0would lead to lower prices accruing to the state.<\/li>\n<\/ul>\n<ol start=\"4\">\n<li><strong>Monopoly-<\/strong> The Adani Group, which includes its four subsidiaries, accounts for nearly one-sixth of all bids submitted and has bid for 11 of the 23 mines up for auction, if all Adani Group companies secure their respective blocks, a significant number of new mines will be under the ambit of one conglomerate.<\/li>\n<li><strong>Climatic Concerns<\/strong>&#8211; When countries across the world are moving away from fossil fuel resources this step to enhance Coal production is criticized by environmentalists.<\/li>\n<li><strong>Health Concerns<\/strong>&#8211; Coal burning releases Carbon dioxide, particulate matter, sulphur dioxide, nitrogen oxide and mercury- thus damaging the health of many people around the region.<\/li>\n<li><strong>Environmental Challenges<\/strong>&#8211; One of the proposed auctions of a mine site is near Maharashtra\u2019s Tadoba- Andhari Tiger Reserve. The State government has raised concerns that mining at the site can lead to destruction of wildlife corridors.<\/li>\n<\/ol>\n<p><strong>Way forward-<\/strong><\/p>\n<ul>\n<li>Government needs to balance its commitments towards Climate Change and its imperative to push the developmental agenda. Promotion of\u00a0Clean Coal Technology\u00a0which is at present Cost prohibitive is the way to move ahead.<\/li>\n<li>As the new auctions usher in a new regime in India\u2019s complex history of coal mining, the full implications on both production and revenues realized will be keenly watched.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Source- Live Mint Syllabus- GS 3- Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth. Context&#8211; Centre was all set to allow commercial and even foreign players to mine coal from 19th October, with the aim of making India among the biggest exporters of the dry fuel, but&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/commercialization-of-coal-mining\/\">Continue reading <span class=\"screen-reader-text\">Commercialization of coal mining<\/span><\/a><\/p>\n","protected":false},"author":10308,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,167],"tags":[1397,1402,1270],"class_list":["post-66886","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-economy-subject","tag-eco_9","tag-eco_91","tag-ene_01","entry"],"jetpack_featured_media_url":"","views":{"total":117,"cached_at":""},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/66886","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10308"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=66886"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/66886\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=66886"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=66886"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=66886"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}