Coal India New Initiative: Reviving Abandoned Mines

In an innovative move, CIL has decided to tap into the latent coal reserves of 23 closed and discontinued underground mines by awarding them to successful bidders from the private sector. This initiative follows a revenue-sharing model, where the cumulative peak rated capacity is 34.14 million tonnes per year (MT/Y), and the total extractable reserves are estimated at 635 MT.

Background and Objectives

CIL had previously identified 34 discontinued mines with good-quality coal reserves that were not financially viable for the company to mine independently. By offering these mines to private sector players willing to operate and produce the dry fuel, CIL aims to unlock these resources. The minimum revenue to be shared with CIL is set at 4%, with the contract period extending up to 25 years.

Benefits of the Initiative

1. Resource Conservation: This approach will conserve valuable coal resources that were previously untapped.
2. Import Substitution: It will help substitute imported coal with high-quality domestic coal for non-regulated sectors.
3. Local Employment: Reviving these mines will provide livelihood opportunities for local communities.
4. Environmental Benefits: Utilizing existing mining infrastructure means no additional land degradation.

CIL is also identifying more mines to attract broader participation by relaxing bid norms. 

Revenue Sharing and Operational Freedom

For coal sold exclusively for gasification or liquefaction purposes, operators will receive a 50% contracted percentage of the revenue share from the authority. The mines will be handed over on an “as is where is” basis, allowing operators to utilize existing infrastructure and project facilities without extra payments. 

Foreign bidders are welcome to participate as second or third members of a consortium per Government e-Marketplace (GeM) portal regulations.

Mining and Auction Process

The successful bidders will act as agencies responsible for selling coal at market-driven prices through an auction process on behalf of CIL. They have the freedom to choose their preferred technology and mining machinery.

Distribution of Mines

• Out of the 34 identified mines:
• Eastern Coalfields Limited (West Bengal) and Bharat Coking Coal Limited (Jharkhand) have 10 each.
• Western Coalfields Limited has 5.
• South Eastern Coalfields Limited has 4.
• Mahanadi Coalfields Limited has 3.
• Central Coalfields Limited has 2.

This strategic move by Coal India Limited marks a significant step towards resource optimization, local employment generation, and environmental conservation. The collaboration with private operators is expected to bring new efficiencies and expertise into the mining sector, ensuring a sustainable future for India’s coal industry.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.