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The first ever Commercial Auctions of Coal Mines

Ministry of Coal

Launch and completion of first-ever auction of coal mines

2021

Overview

Ministry of Coal launched the first ever tranche of commercial auctions in June 2020, which was one of the first policy initiatives under Aatmanirbhar Bharat by Government of India. It paved way for liberalization of Indian coal sector enhancing efficiency, competition and private sector participation in the sector leading to development of a vibrant coal market, boosting economic growth and employment generation. Key features were:

  • No restriction on sale and/ or utilization of coal
  • No technical or financial eligibility criteria for participation
  • Amended FDI Policy to allow 100% FDI under automatic route for coal mining
  • Introduction of National Coal Index to create transparent market-based pricing mechanism
  • Incentives for early coal production and adoption of clean technologies
  • Migration to % revenue sharing mechanism from Rs./tonne-based auction
  • Minimum number of Technically Qualified Bidders for valid auction reduced to 2 from earlier 3

 

Deal Highlights

  • The first-ever commercial auction was launched by Hon’ble Prime Minister of India
  • A total of 38 mines were on offer, of which 20 have been successfully auctioned and agreements have been signed in the presence of Hon’ble Home Minister and Hon’ble Minister of Coal and Parliamentary Affairs
  • Of the 38 mines, 28 mines were CM(SP) mines and 10 were MMDR coal mines, of which 16 CM(SP) mines and 3 MMDR mines were successfully auctioned
  • The floor price for these coal mines was 4% of the revenue share. However, the % revenue share quoted by the successful bidders ranges from 9.5% to 66.75%.

 

Few Successful Bidders

The Andhra Pradesh Mineral Development
Corporation Limited
Aurobindo Reality And Infrastructure Private
Limited
Chowgule And Company Private Limited EMIL Mines And Mineral Resources Limited
Hindalco Industries Limited Jindal Power Limited
JMS Mining Private Limited Sarda Energy And Minerals Limited
Adani Enterprises Limited Vedanta Limited

 

Deal Summary

Mines on Offer 38
Auction Launch Date June 18, 2020
Agreement Signing Date January 11, 2021
Mines Successfully Auctioned 19
Floor Price 4% of revenue share
Lowest % Revenue Share quoted by Successful Bidder 9.5% of revenue share
Highest % Revenue Share quoted by Successful Bidder 66.75% of revenue share
Average % Revenue Share ~ 27%
Aggregate PRC of successfully auctioned 19 coal mines ~51 MTPA
Revenue per MT from 19 auctioned coal mines ~ INR 130 Cr
Estimated Total Annual Revenue Generation at aggregate PRC of 51 MTPA ~ INR 6,656 Cr
Estimated Capital Investment ~ INR 7,658 Cr
Estimated Employment Generation ~ 69,019

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