Commercial Coal Mining in India

Commercial Mining means mining the coal with an objective to make it on open market, not tied to some specific end use. Coal Mines Nationalisation Act, 1973 or CMNA provided that all rights/titles in relation to the coal mines shall stand vested in the Central Government. It also provided that no person other than the Central Government or a government company or a corporation managed or controlled by the Central Government can engage in coal mining.

However, the recently passed act has some enabling provisions which would further lead to opening of commercial mining in the country. We note here that this act has neither amended the CMNA nor explicitly makes declarations regarding commercial mining. It provides that there shall be no end use restrictions on the eligibility to participate in the auction, other than for Schedule II & III coal mines, in which mines will be auctioned only for end use in power, steel & cement sectors. Further, since government has power allocate the plants without end use restriction too, it opens up  commercial coal mining after a gap of some 42 years since 1972, when nationalization of coal mines took place.

The government’s plans as coming out in the form of various statements of Coal secretary / Ministers, and they can be summarized as follows:

  1. Government will be allotting mines to state entities for commercial mining first; in the next phase, private entities would be assigned mines.
  2. To start with, the Coal Ministry is trying to allow commercial extraction of coal in mines which are already with state governments.
  3. As of now, there is no commercial mining of coal in the country. They will hold auctions for private firms to mine and sell coal in the near future.

We note here that after the government had promulgated the  Coal Mines (Special Provisions) Ordinance, 2014 in October 2014, there was a strike in the Coal India Ltd (CIL) workers. One of the demands of the striking workers was that government should remove the clause in the coal ordinance which allows private commercial mining. The strike was called off when government assured to set up a joint committee to look into the issue.

There are several reasons to oppose commercial mining. One reason is to look back and see under what conditions, government nationalized coal mining in 1970s. The reasons included:

  • Adequate capital investment to meet the burgeoning energy needs of the country was not forthcoming from the private coal mine owners.
  • Unscientific mining practices adopted by some of them
  • Poor working conditions of labour in some of the private coal mines

Thus, coal mines were nationalized because of the shortcomings in the way it was run by private parties. The government wanted to ensure smooth investment and uninterrupted supply of coal for the growing demand; so that it could prevent rapid depletion of natural resources by well-planned extraction and to ensure the safety and well-being of the workers.

However, where do we stand today?

After 42 years, we find that the state monopoly in coal has been extremely inefficient. Country is forced to import hundreds of millions of coal every year. There is a need to take bold political decisions so that multiple coal producers can competitively produce coal and there is an uninterrupted supply of coal for various needs. However, existing issues also need urgent attention such as reconstruction and reorganising of old mines; coal theft; illegal mining; updating the obsolete technologies etc. Given past experience with privatisation, it is right to be apprehensive that they might employ labour at low wages with poor social security. Government should address these apprehensions at priority level.

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