Commercial mining: Steel companies stay away from bidding in coking coal blocks

KOLKATA: No steel company has shown interest in bidding for four coking coal blocks of 38 mines put on auction for commercial mining as they have concern about fuel quality and high capital cost, officials said on Friday.

They said that of the four blocks with coking coal, a key raw material for manufacturing of the metal, two received bids from companies which do not make steel. "Steel companies did not show interest in bidding for the coking coal blocks as the quality of the fuel from these mines is not very good and capital expenditure for mining is high. Availability of capex (capital expenditure) funds is also limited during the COVID-19 pandemic. Import is a viable option," an official of a steel company said on condition of anonymity.

He said, "The four mines were offered four times in the past for captive use but no steel makers had shown interest earlier. In this round, steel companies have not submitted bids." The two coking coal mines that received bids are Brahamadiha in Jharkhand and Urtan in Madhya Pradesh, he claimed.

The government has in total put up for auction 38 coal blocks for commercial mining. As many as 42 companies have submitted 76 bids for 23 coal mines in the auction process. The coal ministry had said two or more bids were received for 19 coal mines.

"The government will go ahead with the 19 coal blocks for which two or more bids were submitted. The auctioning process has been annulled for the rest of the mines that received either one bid or nothing," another official said.

In the auction process, eight of 11 blocks in Madhya Pradesh received bids, while companies have shown their interest in six of nine coal mines in Jharkhand. Firms submitted bids for five of Odisha's nine blocks put on for sale, while two of seven mines in Chhattisgarh attracted bidders. Maharashtra witnessed interest of companies for its two mines put on for auction.

In June, Prime Minister Narendra Modi launched the auction process for 41 coal blocks for commercial mining, a move that opens India's coal sector for private players, and termed it a major step in the direction of the country achieving self-reliance.

The coal ministry had later revised the list of mines to be auctioned for commercial mining to 38 instead of the 41 announced earlier. The auction of coal blocks for commercial mining is expected to garner Rs 33,000 crore of capital investment over the next five to seven years. Despite being the world's fourth-largest producer, India is the second-largest importer of the dry-fuel.