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Wednesday, February 21, 2018

Coal India

by Century Financial in Media

Coal India

Coal India to lose it near monopoly status as India would permit private firms to mine coal for commercial use. Coal Minister Piyush Goyal confirmed yesterday that India will auction coal blocks to private companies, a move that would put an end to more than 40 years of restrictions on the sale and use of coal.

So far, Coal India and a small stated-owned company were the only firms allowed to mine and sell coal in India, though private aluminium and power producers were allowed to bid for captive coal mines.

The coal block auctions will not only attract Indian conglomerates such as Adani Enterprises but will also draw large global mining companies to invest in India. Opening up production to private firms could provide a boost to India’s resource-rich eastern states as all the revenue generated from the auction would go the states.

The decision to permit commercial coal mining is India’s latest effort to lower its imports and boost the use of domestic coal. India’s coal imports for the year ended March 2017 stood at about 191 million tonnes and for seven months ended Oct 2017, India imported 116.1 million tonnes of coal.

Shares of Coal India (Rs. 311.25) held on to its gains despite this announcement in line with the broader market.

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