Demerge existing coking coal mines from CIL, says government panel

NEW DELHI: With coking coal production under CIL stagnating for several years, a government panel has said the PSU's mines for the commodity should be taken away, and a separate entity be formed for handling that.

"The existing coking coal mines should be demerged from CIL and a separate coking coal company may be formed. The new entity can continue to be under the government to begin with and to remain fully responsible for coking coal mining development," it said.

"Any non-coking coal that is mined in the process can be offered to Coal India Limited (CIL) at a reasonable price to be fixed by the regulator," it added.

The Panel, formed to examine policy issues linked to both raw material availability and infrastructure linkages for the steel sector for the 12th Plan, said that India has 33 billion tonne coking coal reserves in which CIL has 90 per cent share.

"There are several virgin coking coal assets currently lying underdeveloped with CIL and for which CIL does not have plan for development in the 12th Five Year Plan, it said.

"These assets may be put on auction and the highest bidder may be allocated these blocks...As the focus of CIL is on power grade coal, the coking coal production in the country has stagnated for the last several years," the Panel said.

The Panel, however, added the government may consider additionally or in substitute of setting up a separate firm, coking coal assets could be given for development to steel producers on a competitive basis.

"A policy may also be considered for allowing the surplus coal from such captive mines to other end-users through an appropriate mechanism either through CIL or certain other agency, with appropriate safeguards to prevent any misuse," it said.

The Panel observed that more than 30 million tonnes of low-grade coking coal gets diverted to the power industry due to lack of washery technology and washing capacity in the country.

"This should be gradually stopped and instead the coal should be supplied to steel plants for beneficiating and using in their own plants," it said.

Out of the total raw coal production of 531 million per annum, less than 17-18 million tonnes are of washable grade raw coking coal is produced in a year.