Indian Coal Sector: Year End Review 2021

Major highlights of the year 2021 for the Indian Coal Sector include single window clearance to speed up operationalization of coal mines, setting up of coal import monitoring system, Colliery Control (Amendment) Rules, Mineral Concession (Amendment) Rules.

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Colliery Control (Amendment) Rules, 2021

With the objective of scrutinizing the relevance and requirement of various compliances as well as rationalizing, reducing and simplifying the related processes to enhance ease of doing business by doing away parallel compliances, Coal Mines (Conservation and Development) Act, 1974 (CMCD) and CMCD Rules, 1975 have been repealed reducing one Act from the compliance burden and Colliery Control Rules, 2004 have been amended vide Colliery Control (Amendment) Rules, 2021 which have been notified and published on 09 August, 2021.

Mineral Concession (Amendment) Rules, 2021

Mines and Minerals (Development and Regulation) Amendment Act, 2021, carried out amendments in MMDR Act 1957. This necessitated amendment in the Mineral Concession (Amendment) Rules, 1960. Hence, MCR, 1960 have been appropriately amended vide the Mineral Concession (Amendment) Rules, 2021 which have been notified on 01 October, 2021.

With insertion of Rule 24C in the MCR, 1960, mining lease for coal or lignite is now granted to a Government company or corporation for 50 years. Mining lease granted before the MCR reforms of 01 October, 2021 shall be deemed to have been granted for 50 years or till 31st March, 2030, whichever is later. State Governments are empowered to extend the mining lease for a further period of 20 years at a time for allotted mines.

With insertion of Rule 27A in the MCR, 1960, lessee of captive mine is allowed to sell coal or lignite up to such per cent (50%) of the total coal or lignite produced in a financial year after meeting the requirement of the end use plant linked with the mine. This provision is not applicable to a power project awarded on the basis of competitive bid for tariff including Ultra Mega Power Projects.

Central Government may, by notification in the Official Gazette and for the reasons to be recorded in writing, increase the said percentage of coal or lignite that may be sold by a Government company or corporation beyond 50%.

Rule 28 of MCR, 1960 has been amended providing for lapsing of leases where production and dispatch has not commenced within a period of two years from the date of execution of the mining lease or is discontinued for a continuous period of two years after commencement of production or dispatch. The mining lease shall lapse on the expiry of the period of two years from the date of execution of the lease or as the case may be, discontinuance of the production and dispatch.

Rule 64B has been amended providing that royalty shall be charged on run-of-mine coal or lignite irrespective of its processing within or outside the leased area.

Launch of Single Window Clearance

The Union government launched Single Window Clearance portal on 11 January, 2021 for the coal sector to speed up the operationalization of coal mines. It is a unified platform that facilitates grant of clearances and approvals required for starting a coal mine in India.

Coal Import Monitoring System

There is substantive time lag in DGCI&S providing import data. Consolidated import data is made available by DGCI&S after a time lag of about 2 months while disaggregated data comes only after about 3 months. This time lag in receiving data makes it deficient for taking any policy decision and reducing imports. Therefore, a Coal Import Monitoring System has been created jointly with the help of Ministry of Commerce & Industry.

Commercial Coal Mining

The auction-based regime introduced in 2014 allowed private sector participation. However, it was limited to captive usage in own end use plants. The sector has been opened up for commercial coal mining by private players in 2020 and first ever successful auction of commercial mining was launched on 18 June, 2020 and concluded with allocation of 19 coal mines.

Commercial coal block auctions are conducted in a two-stage online bidding process, which involves technical screening and submission of competitive initial price offer in the first stage, and a second and final stage where better price offers are intended to be received.

Commercial coal mining auctions are completely different from the earlier regime of restricted sectors, use and price. Now, there are no such restrictions at all. The auctions have terms and conditions which are very liberal, allowing new companies to participate in the bidding process.

Reduced upfront amount, adjustment of upfront amount against royalty, liberal efficiency parameters to encourage flexibility to operationalize the coal mines, transparent bidding process, 100% FDI through automatic route is allowed and reasonable financial terms and revenue sharing model based on the National Coal Index.

So far, 28 coal blocks have been auctioned in the States of Chhattisgarh, Jharkhand, Madhya Pradesh, Maharashtra and Odisha.

Coal Washeries

The Government plans to increase the supply of washed coking coal to the Steel sector from 3 to 15 MT. For this, two coking coal washeries have already been commissioned, three coking coal washeries are under construction, in two cases - Letter of Intent (LoI) has been issued and in one case - the tender is under evaluation.

For Non-coking coal washeries, one non-coking coal Washery is under construction and in two cases of non-coking coal washeries, LoI has been issued.

Sustainable Development Cell

Recognizing the importance of bringing sustainability in coal mining, a "Sustainable Development Cell" has been created in Ministry of Coal and also in all coal PSUs to promote adoption of better environmental management practices in coal mines, thereby providing a better environment to people working and residing in nearby areas and also improve the overall image of coal sector in the country.

Green Initiative Activities

  • Improve public perception of coal mining via Coal Mine Tourism- Four eco-parks completed, and foundation stone laid for five eco-parks till October 2021. Two more Eco-parks to be completed in 2021-22 and two each during 2022-23 and 2023-24.
  • Bio-reclamation of mined-out areas and plantation in free areas in and around coal mines - Cumulative achievement of 5445 Hector and plantation of 130 lakh saplings (up to Oct 2021) against the target of 5400 Ha & 130 lakh plants for FY2020-22.
  • Supply of mine water for domestic use and utilizing mine water for potable and irrigation purposes.

Drilling

Promotional Drilling: A programme of Promotional/NMET (Regional) drilling comprising 1.38 lakh meters in coal and 0.12 lakh meters in lignite has been drawn up in Annual Plan 2021-22 of CMPDI. The programme is under execution by MECL, DGMs of Nagaland & Assam and CMPDI.

As against this, the achievement of drilling upto the month of October, 2021 is 1.08 lakh metre, against the target of 0.89 lakh metre, which is 121% of the target.

Overall Progress of Detailed Drilling in 2021-22: For 2021-22, a target of 7.50 lakh metre of drilling (Departmental: 4.71 lakh metre, Outsourcing: 2.79 lakh metre) has been proposed. As against this, 3.80 lakh metre of drilling has been carried out upto the month of October, 2021 against the target of 3.92 lakh metre, which is 97% of the target.