With the commercial coal mining auctions, the government has signaled its intentions about reinvigorating the mining sector and laying a strong foundation for energy security in the country

As India battles a war on two fronts namely Covid-19 and the economy, not to mention the role of our maleficent neighbours, who have opened up a new front to tackle, the government has been attempting to revitalise the economy and the essential sectors which drive the economy. Mining is one such sector. The coal sector reforms which have been brought in signals the beginning of this revitalization and also allows private players to play an important role.

The reforms
The commercial coal mining auctions are completely different from earlier regimes of restricted sectors, use and price. Now there are no such restrictions at all. The proposed auctions have terms and conditions which are very liberal allowing new companies to participate in the bidding process, reduced upfront amount, adjustment of upfront amount against royalty, liberal efficiency parameters to encourage flexibility to operationalize the coal mines, transparent bidding process, 100 per cent FDI through automatic route allowed and reasonable financial terms and revenue sharing model based on National Coal Index. The successful bidders also will have flexibility in coal production unlike past and have provision for incentives for early production and coal gasification. The coal mines auction process will lay a strong foundation for energy security in the country by producing additional coal providing large scale employment and huge opportunities for investment in the coal sector. These efforts will supplement the 01 billion tonne coal production likely from Coal India in FY 23-24 and meet the full requirement of domestic thermal coal.

Increasing energy security and strengthening the economy
“While there has been private sector participation in mining, the government through its various public-sector companies continues to be the largest participant in the domestic mining industry,” says Rajaram Krishnamurthy, Vice President, Marketing, Sales and Customer Service, Daimler India Commercial Vehicles (DICV) “Much of India’s potential mineral resources are yet to be fully explored. Earlier, government policies and legislation had largely focused on regulation of mines and minerals rather than on exploration and development. Taking cognizance of the stagnation of the mineral industry, various reforms have been initiated by the Indian government allowing for greater private sector participation in mineral exploration, mine development and maintenance.”

Mukaya Simubali, Executive Director (Asia), AAC Mining Executors Group points out “The Indian Government has to secure energy sources especially the ones generated from coal. More than 55 per cent of power generated in India comes from coal. In 2019, India produced around 730 MT of coal but the consumption was 966 MT. India has the fifth largest coal reserves in the world with 107 billion tons, so the government has to enable private sector participation in commercial coal mining to fulfill this gap and increase coal production.”

The reforms have added a lot of optimism in a sober market subdued by the pandemic “The government has auctioned 41 coal blocks with liberal terms and conditions, for commercial mining to ensure competition, transparency, participation of the private sector and ease of doing business The mining sector and subsequently the government will see more revenue and free trade which will scale up the industry.” says Puneet Vidyarthi, Brand Leader, Case India.

Increase in demand of mining equipment
The reforms many believe will also improve the demand for mining equipment. Rajaram Krishnamurthy says “These reforms are expected to result in a 40 per cent increase in coal production in India. Various reforms including the elimination of differences between captive and non-captive mining are beneficial for the development of mines and minerals exploration and production. Tippers and special applications, such as deep mining trucks, will see more demand as a result. Apart from HCVs, we also see a decent rise in demand for MCVs and LCVs to help in the transport to warehouses and then from there on to individuals for sale.”

A step towards Aatmanirbharta
The coal sector reforms which have been brought in signals the beginning of Aatmanirbharta or self-reliance which has been advocated by the GoI. Pranav Koshal, Founder, Bulls-i Consulting points out the coal sector reforms are not just about investments and improving coal production. They have the innate potential to usher in immense job creation opportunities and boost the government’s Make in India program, since coal mining operations require large machines and manpower. Besides, leading to the induction of new technology and competition in the sector, which will increase self-reliance, remove operational efficiencies and usher in an era of greater prosperity. The government has introduced a more equitable system of sharing of revenues, moving away from fixed rates to an ad-valorem system. So when the prices go up, the miner shares more with the government, and consequently, the economies of coal bearing states like Jharkhand, Chhattisgarh, Madhya Pradesh, Maharashtra and Odisha will also prosper.

Mining sector to go hi-tech
Pranav believes the existing situation has also catalysed the use of digital technologies in the Mining sector “We are finally beginning to see big changes permeating the age-old industry of mining. Shaking the image of the dirt covered miner in the dark, to new-age digital feats of technology digital technologies such as artificial intelligence, automation, VR and AR are transforming the mining industry at an accelerating pace achieving major improvements in performance, safety, costs, and sustainability above all exceeding customer expectations and global sustainability initiatives. This will deliver a dynamic and transformative mine environment.

These are solutions to monitor and review the mining performance and data on mobiles, getting alerts and other information without having to be on site or in the control room. Or remote condition monitoring service, which will permit remote experts to monitor and prevent failure before it occurs. Drones will take aerial pictures packed with data to the pixel, sensors monitor the slightest degree of change in airflows, trucks are becoming driverless, equipment is maintained remotely – all of these technologies rapidly change the mining industry. These new technologies will no doubt remove a lot of the uncertainty and risk from mining each and every day.”