New Delhi 23 September 2015: The recent reforms in the Coal Mines Special Provisions Act and the Mines and Minerals (Development and Regulation) Amendment Act (MMDR) are a step in the right direction. However there is still a need to streamline approval and development processes to further propel the growth of the coal sector.
It is evident from the fact that after over 2-3 decades, CIL was able to open new mines while even Schedule II coal blocks, auctioned in the beginning of the year, are yet to be operationalised fully. The key issue that winning bidders are facing is delay in the grant of all clearances and approvals that were expected to be granted as soon as the blocks were taken over by them.
The challenge now lies in developing these mines at efficient cost and maximising the recovery of resources following robust bidding which has resulted in a higher fixed commitment. Sectoral reforms so far in licensing and ownership are fundamentally transformational, but in order to deliver real value, a wide range of procedural improvements which are still an irritant and roadblock, are needed.
These observations are part of the PwC and ICC report - Coal block auction: A win or a winner’s curse?
Kameswara Rao, Leader Energy Utilities and Mining PwC India said “Subsequent to winning the coal blocks, the new owners face a challenge in restarting operations within their budgeted capital outlay, improving productivity to lower operating costs, and ensuring full compliance with various regulatory and other requirements. Globally, mining players have been successful in achieving this, under more challenging policy and market conditions. Learning from these experiences and practices will help companies succeed in the emerging competitive mining industry.”
The main differences for the stakeholders between the new and the old allocation process are:
As per Shiv Siddhant Kaul, President Indian Chamber of Commerce, “As the auctions progress, we will suggest that the coal blocks having large reserves (greater than 100 MTPA and with annual production more than 3 MTPA) should be brought in for auction to sustain the raw material requirement of large integrated steel plants (ISPs). Putting more number of coal blocks in the upcoming auctions shall in a way only benefit end users. At the same time, a large number of coal fields earmarked for captive mining are notified under the Coal Bearing Areas (Acquisition and Development) Act, or CBA. This may also be denotified to speed up groundwork.”
With the freshly allocated blocks, the challenge is to sustain the basics—production, cost and safety measures. Some of the key areas of focus that a new allocatee will need to appreciate and adhere to are:
The focus has shifted not only to improving production but also to cost-cutting measures, manpower selectivity, best equipment maintenance practices, process checks and controls, etc. These measures have helped some of the major global players in surviving in the challenging mining environment.About PwC
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Founded in 1925, ICC—the leading and only national chamber of commerce operating from Kolkata—is one of the most proactive and forward-looking chambers in the country today. Its membership spans some of the most prominent industrial groups in India. ICC is the founder-member of FICCI, the apex body of business and industry in India. Its forte is its ability to anticipate the needs of the future, respond to challenges and prepare stakeholders in the economy to benefit from these changes and opportunities. Set up by a group of pioneering industrialists led by Mr G D Birla, ICC was closely associated with the Indian Freedom Movement, as the first organised voice of the indigenous Indian industry. Several of the distinguished industry leaders in India, such as Mr B M Birla, Sir Ardeshir Dalal, Sir Badridas Goenka, Mr S P Jain, Lala Karam Chand Thapar, Mr Russi Mody, Mr Ashok Jain and Mr Sanjiv Goenka, have led ICC as its president. Currently, Mr Shiv Siddhant Kaul is the chamber’s president.
ICC is the only chamber from India to win the first prize in the World Chambers Competition in Quebec, Canada.
ICC’s North-East Initiative has gained new momentum and dynamism over the last few years, and the chamber has been hugely successful in spreading awareness about the great economic potential of the North-East at national and international levels. Trade and investment shows about the North-East in countries like Singapore, Thailand and Vietnam have created new vistas of economic cooperation between the North-East of India and South-East Asia. ICC has a special focus on India’s trade and commerce relations with South and South-East Asian nations, in sync with India’s ‘Look East’ policy. It has played a key role in building synergies between India and her Asian neighbours such as Singapore, Indonesia, Bangladesh and Bhutan through trade and business delegation exchanges and large investment summits.
ICC also has a very strong focus on economic research and policy issues. It regularly undertakes macroeconomic surveys/studies, prepares state investment climate reports and sector reports, and provides necessary policy inputs and budget recommendations to governments at the state and central levels.
Over the last few years, ICC—headquartered in Kolkata—has truly emerged as a national chamber of repute, with full-fledged offices in New Delhi, Guwahati, Patna, Ranchi and Bhubaneshwar functioning efficiently and building meaningful synergies between industry and the government by addressing strategic issues of national significance.
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