Coal Mining: Changing Supply Paradigm Could Take 7-10 Years, More Needed To Rid Sector Of Woes


Coal Mining: Changing Supply Paradigm Could Take 7-10 Years, More Needed To Rid Sector Of Woes

The government’s recent move to allow commercial mining of coal, and notification of the methodology for auctions sets the stage for a change in India’s coal supply paradigm. But that’s easier said than done with there being a raft of structural issues that need sorting out. The hour is propitious, therefore, to scrutinise the landscape using four lenses — supply, pricing, quality, and the interest of global miners.

For ages, the supply side has been a story of delays in approvals, land acquisition, and rehabilitation of project-affected people. Of the 89-odd coal blocks auctioned under the new regime in the past three years, only a handful have started operations. A number of Coal India projects, too, are delayed.

Today, it takes at least 5 years for a coal mining project to start commercial operations. Unless there is single-window clearance for statutory approvals, streamlining of land acquisition processes, and improvement in rail connectivity, commercial miners would run into the same challenges that have beset public sector and captive miners.

Sorting these requires political and regulatory drive. Without that, the coal supply curve is unlikely to turn for the better anytime soon. That means pricing would continue to be determined by Coal India and Singareni Collieries till the share of commercial miners in the output increases and supplies improve. Read More

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