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COMMERCIAL MINING OF COAL, INDUSTRY - Coggle Diagram
COMMERCIAL MINING OF COAL
Context
Parliament have recently passed the Mineral Laws (Amendment) Bill, 2020 which opens up the coal sector for commercial mining by paving way for private and global players.
Regulation of
the Coal Sector
• This Act amends the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) and the Coal Mines (Special Provisions) Act, 2015 (CMSP Act).
• The Coal Mines Special Provision Act 2015, which provides for opening up of commercial coal mining to private and public entities, is an offshoot of the 1973 Act.
Regulation
of the
Coal Sector
• The Ministry of Coal has the overall responsibility of managing coal reserves in the country.
• India is the third-largest producer of coal in the world, but also third-biggest importer of coal despite having the world’s fourth largest coal reserves.
• India’s coal industry was predominantly driven by the private sector in the early years after Independence.
• Indira Gandhi government in 1973 transferred all coal holdings to public sector company “Coal India Ltd” through the Coal Mines (Nationalisation) Act, 1973.
• The Act allows private Indian companies to mine coal only for captive use.
Captive mining is the coal mined for a specific end-use by the mine owner, but not for open sale in the market. Enduses currently allowed under the CMN Act include iron and steel production, generation of power, cement production and coal washing.
The central government may notify additional end-uses.
Other Details
• India will now offer coal mines to private companies ‘only for commercial mining and sale purpose’, thereby moving away from the earlier regime of offering mines for captive use.
• The coal ministry will auction coal blocks for commercial mining on a revenue sharing basis which is based on the recommendations of an expert committee headed by former Central Vigilance Commissioner Pratyush Sinha.
• Till 1993, there were no specific criteria for the allocation of captive coal blocks. Captive mining for coal was allowed in 1993 by amendments to the CMN Act.
• In 2019, Government allowed 100% FDI under the automatic route in coal mining for captive consumption.
• The Mineral Laws (Amendment) Act, 2020removes this restriction on the use of coal mined by such companies. Companies will be allowed to carry on coal mining operation for own consumption, sale or for any other purposes, as may be specified by the central government.
INDUSTRY