India’s newly launched coal selling process, initiated by Coal India Ltd (CIL), is set up to sell 10 million tonne of coal by electronic auction this fiscal year.
If the method proves successful, about 20% of CIL's present production of about 360Mt is expected to be made available under spot purchase mechanisms by way of e-sales.
The launch of coaljunction.com followed the deregulation of India’s coal sector in response to the need to develop better mechanisms for selling coal. India’s coal trade has long been dominated by black marketing and mechanisms like these are seen as part of a transition to market-driven coal prices.
coaljunction.com is the latest e-platform of Metaljunction Services, a 50-50 subsidiary of the government-owned Steel Authority of India Ltd (SAIL) and private sector major Tata Iron & Steel.
"Coaljunction has been launched to bring about efficiency and transparency to the way coal is sold. At the same time, the objective is to bring about fair market price realisation for CIL and its subsidiaries," P C Parakh, secretary of the Ministry of Coal and Mines, told the Financial Express.
India’s Coal Ministry set up a committee in January to review the coal sector with specific reference to bridging the demand-supply gap, improving man and machinery productivity and restructuring CIL. The terms of reference included examining the merits of opening up coal trading and reviewing the present policy on captive coal mining. Captive coal mining refers to agreements whereby producers use their production purely for their own needs, such as power generation.
In related news, India’s coal ministry has approved 100% foreign direct investment (FDI) in the captive mines of cement and steel companies, up from the previous 74%
If cleared by cabinet this could result in the captive coal mines of Tata Steel, Essar, Ispat and SAIL being funded almost solely by foreign cash.
The Government has made available coal mines for captive consumption to private companies setting up power projects with the 100% foreign investment allowed in such ventures, so long as the coal produced is used purely for the power projects’ own generation.
The coal ministry recently allotted 90 blocks for captive mining — to be largely used by steel and cement firms.
