Companies cautious in second round of coal block auctions

The second round of coal block auctions, offering ready-to-produce mines, did not see much of a response, as miners were uncertain about the future prospects of the assets on the block.

The Centre had opened technical bids for 20 mines on March 2, but auctions for five mines were annulled due to lack of bids.

According to those participating in the auctions, companies are unsure about whether the mines will become operational in the one-year time frame that has been mandated, as some of these assets are yet to get regulatory approvals, including environmental clearance.

The relatively unexplored nature of these mines is another reason for companies showing a lack of interest in these blocks.

Speaking to BusinessLine , an official at a company that has already made winning bids in the first round, said: “The ready-to-produce mines have to start operations within one year, but the end-user plants (power or steel) attached to the mine do not have statutory clearances.”

He added: “One is not sure what happens to the investment. There is also not enough clarity on how the Coal Ministry will deal with the performance bank guarantee in cases of delay.”

Initially, the Centre had proposed to offer 23 ready-to-produce mines. But, two — Utkal B1 & B2 — were dropped due to directions from the Delhi High Court in an ongoing case between the ministry and Jindal Steel and Power Ltd.

Another mine, Rohne, was also dropped as the end use (steel) has been questioned.

Of the remaining 20 mines, five did not receive the minimum number of five bids on March 2.

This left the Centre with only 15 mines for the final auction between March 4 and March 8.

According to details posted on the website of MSTC, which is handling the e-auctions, the mines that have been dropped due to lack of bids have geological reserves of 257.97 million tonnes.