Chairman of Vedanta Resources Anil Agarwal said that the government should allow only large companies — with a proven track record of developing big mines — to commercially mine coal, even as the government is in the process of setting eligibility criteria for pilot auctions.
“The government should not be revenue-minded; it should be production-minded. I am confident that the government will auction very large coal blocks in commercial mining,” Agarwal said in an exclusive interview to ET. “Keep it simple and make sure only the right people come in. Allow only companies that have the background of developing large mines. Only large miners should be allowed to participate so that internationally people know that no one can fiddle around.”
ET on August 30 reported that the government was likely to auction large coal blocks for commercial mining to Indian and overseas miners by November-end.
A senior government official said the government would finalise coal blocks and the eligibility conditions for firms for participation in the auction of mines for commercial purposes. Global miners such as BHP, Peabody and Glencore have evinced interest in coal mining and carrying out related operations in the country, the official added.
Agarwal said the move to allow 100% FDI in commercial mining will make coal affordable and easily available, adding, some countries do not want India to produce and be self-sufficient in coal production.
“The world does not want us to produce… they will bring obstacles. But this move (allowing FDI) will bring higher environmental practices to India,” Agarwal said.
It is unfortunate that Coal India is the only company supplying coal to India, and there should be 5-10 such sources for affordable coal and competitive power costs, he said.
The Union Cabinet on August 29 approved 100% foreign direct investment (FDI) under the automatic route in mining, sales and associated infrastructure. The Coal Mines Special Provision Act, 2015 paved the way for opening up commercial coal mining to private and public entities.
The Act, however, allowed 100% FDI under the automatic route for coal and lignite mining for captive consumption by power projects as well as iron and steel, and cement units. Overseas companies required a registered Indian company to participate in coal block auctions. The FDI was also permitted for setting up processing plants like washeries, subject to the condition that the company could not do coal mining or sell the washed or sized coal in the open market.