Indian coal mining out of bounds for Chinese firms
Wednesday, August 5th, 2020
A month after banning 59 Chinese apps and restricting Chinese firms from participating in bids for Indian government procurement, the Centre on Tuesday sought to stop the neighbouring country from participating in the ongoing auction of coal mines for commercial extraction by the private sector.
According to the new guidelines, from now on, foreign direct investment in commercial coal mining from a country sharing land border with India will be allowed only after government approval.
While the Centre did not take any names, the move is clearly aimed at stopping Chinese mining firms such as China Shenhua Energy and China Coal Energy, which are among the largest coal firms in the world, from taking part in coal mining operations in India. On Tuesday, the coal ministry issued a corrigendum to the tender document clarifying that although 100% FDI is permitted in coal mining under the automatic route, investments or bids from countries sharing a land border with India will now require government clearance.
In other words, such proposals will have to be first be vetted by the government before any participation is allowed. Prime Minister Narendra Modi launched the auction process of coal blocks for commercial mining in June. Under commercial mining, private players are allowed to extract coal without any restrictions on end use of the fossil fuel.
The bidding terms were also liberalised to attract foreign players. The Centre also amended the Coal Mines Special Provisions Act, 2015 to simplify the auction process and attract more investors. According to the government, participation of private players will bring efficiency to the coal sector and lead to competitive pricing of the fuel.
Currently, 41 mines with a total geological coal reserve of 17 billion tonnes are on offer under the first phase of commercial coal mine auctions. These 41 mines are expected to cumulatively earn the respective states around Rs 20,000 crore revenue annually. The last date for sale of the tender document is August 14 and the due date for bid submission is August 18. According to reports, the coal ministry is likely to extend the deadline after some investors requested more time.
Will it cost India?
Unlikely, as the coal block auction has so far received good response with a lot of inquiries from both Indian and global mining, metal and energy companies. The mines on offer are attractive to investors as they are largely fully explored ones and can be brought to production in no time