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India Auctions 13 Commercial Coal Mines to Cut Imports

India has successfully auctioned 13 commercial coal mines, under its eighth and ninth rounds, in an attempt to ramp up domestic output and reduce import dependency, according to a statement from the federal coal ministry.

Of a total of 13 mines auctioned, eight are thermal coal mines and five coking coal, located in Madhya Pradesh, West Bengal, Maharashtra, Chhattisgarh and Jharkhand.

While Madhya Pradesh has four thermal coal mines and one coking coal mine that were auctioned with accumulated reserves of 1.30 billion mt, the other states have one thermal coal mine each. The remaining five are coking coal mines, with Jharkhand having the highest number of mines being auctioned and accumulated reserves of 756.71 million mt.

“Since the launch of commercial coal mines in 2020, a total of 104 coal mines have been successfully auctioned, having a production capacity of 226 million mt/year,” the statement said. Once operational, the mines will significantly boost domestic coal production, making the country self-sufficient in coal, it said.

Through commercial mining, producers are allowed to sell coal to any buyer without any ceiling price restrictions, but a portion of the revenue must be shared with their respective state governments. Currently, there are no restrictions on the sale and/or utilization of coal and no technical or financial eligibility criteria for participating in the coal mine auctions.

In the April-February period of fiscal year 2023-24 coal production from captive and commercial mines increased 27.06% year on year to 126.8 million mt. Coal dispatch from the captive and commercial mines in this period also rose 29.14% year on year to 128.88 million mt, the coal ministry said previously.

India produced 880.72 million mt of coal in the period, up 12.14% year on year. The country aims to produce 1.1 billion mt of coal by the end of the fiscal year (April-March).

India imported 237.20 million mt of coal in the April to February period of FY 2023, up 7.77% year on on year, according to data from S&P Global Commodities at Sea. India expects its share of imported coal to fall below 15% in its total consumption in FY 2025, according to CAS.

However, despite the government’s emphasis on increasing energy security by auctioning more mines, only a few mines are currently operational due to long clearance and difficulty in the foreign funding process. Moreover, the gap between domestic output and surging demand remains despite Indian production rising in the recent years, making imports necessary, market participants said.

India has also set a production target of 186.63 million mt of coal from its commercial and captive coal mines in the next fiscal year and eventually increase output to 383.56 million mt by FY 2030.

Source: S&P Global

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