India may allow only commercial coal mining in the future

Why in news

The government may in near future scrap the present system of allocating coal mines for captive use and instead only auction mines for commercial use to private as well as foreign companies with a view to boost domestic product and cut imports, a top official said.

Highlights

  • The cabinet had last week approved auctioning of coal mines to any firm bidding the highest per tonne price.
  • The move, which would not just help attract foreign investment but also bring in efficiency and promote competition, follows government’s decision of opening up the coal sector to commercial mining by private entities.
  • At present, private sector firms are only allowed to mine coal for use in cement, steel, power and aluminum plants. Coal India Ltd (CIL) is the sole commercial miner with 80% market share.
  • Terming commercial mining a “full-fledged reform” in the coal sector, the secretary said the government is evaluating whether it is advisable to go for end-use restrictions. “There is an idea floated by few people which we are examining whether it is advisable to go for end-use restrictions because that is a half-hearted reform. It is not a full-fledged reform. Commercial mining is a full-fledged reform so that is something which we are evaluating and whatever is in the best interest of the country will be done,
  • Stating that the country was slowly moving towards free market in the coal sector, the secretary said CIL ought to improve its efficiency else it “will not be in the market.
  • On deadline for commercial mining auctions, the secretary said : “Our expectation is that we will complete the process of auction by March 2019.” He, however, did not divulge the number of blocks to be put for bidding in the first tranche.
  • The government had in 2014 auctioned 29 mines to private players and states for capital use in power, steel, aluminium and cement plants. In the following year, it permitted the allotment of coal mines to states for mining and commercial sale to medium, small and cottage industries. Close to 16 mines were allotted to several states.

Coal mining in India

  • Coal mining in India began in 1774 when John Sumner and Suetonius Grant Heatly of the East India Company commenced commercial exploitation in the Raniganj Coalfield along the Western bank of Damodar River.
  • As on 31 March 2015, India had estimated coal reserves of 306.6 billion metric tons (338.0 billion short tons), the fifth largest coal reserves in the world.
  • India is the fourth largest producer of coal in the world, producing 536.5 million metric tons (591.4 million short tons) in 2014.

Laws relating to mining in India

  • Along with Mines Act, 1952 there are many other acts which regulates and provides a framework to mining, which includes “mines and Minerals (Development and Regulations) Act, 1975”, “Auction by Competitive Bidding of Coal Mines Rules, 2012”.
  • Mining is considered as one of the important component of the economy of a developed as well as of a developing country, it adds to the national income of a country at the same time results in employment generation on one hand and on the other hand it entails depletion, over utilization and exploitation of non-renewable resources.
  • Mine as per section 2(j) of Mines Act means any excavation where any operation for the purpose of searching for or obtaining minerals has been or is being carried from the earth by means of tunneling and shafting as well as it includes open working or quarries. All power stations, convertor stations, rectifier stations, etc. used for supplying electricity, are also being covered under the ambit of mining. It includes different type of mining like:
  • Hydraulic Mining – mining by means of the application of water under pressure.
  • Open cut or strip mining –it deals with the excavation of the surface above the coal to expose the coal and then the digging and removing of the coal.
  • Placer mining – it is a process of obtaining the valuable material from placers by simple washing, by dredging, by hydraulic or other methods.
  • Quartz mining – it includes mining on veins or ore bodies in place as distinguished from surface digging or washing.
  • Oil and gas mining – it deals with the extraction of oil and gas from the earth, which earlier was not considered as mining but due to the recognition of oil and gas as minerals and due its common usage, extraction and products of oil and gas from earth is now regarded as mining.

Q.1 With respect to coal mining in India, consider the following statements

  1. Open cast mining is used to extract coal from shallow depts.
  2. In India, most of the coal production comes from underground mines.
  3. The key players in Indian coal sector are Coal India Limited (CIL) and Singareni Collieries Co. Ltd

Choose the correct answer from the above

  1. 1 only
  2. 1 and 2 only
  3. 1 and 3 only
  4. All of the above

Answer: c.) 1 and 3 only


 

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