Efforts to Stop Coal Imports by FY26: Key Points

Efforts to Stop Coal Imports by FY26: Key Points

Subject :Economy

Section: External Sector

1. Objective: The Ministry of Coal is actively working to cease coal imports by the fiscal year 2025-26.
2. Comprehensive Approach: Various measures are being undertaken, including the enhancement of production from commercial and captive mines, to achieve the goal of self-sufficiency in coal.
3. Reforms: The Ministry is implementing a series of reforms to boost coal production and reduce dependency on imports.
4. Underground Mines Production: The target is to increase coal production from underground mines to 100 million tonnes (mt) by 2030, employing mass production technology.
5. Commercial Mining: The eighth round of commercial coal mines has been launched, involving the auction of 39 coal blocks located in Jharkhand, Odisha, Maharashtra, West Bengal, and Bihar.
6. Legislation: The coal blocks fall under the purview of the Coal Mines (Special Provisions) Act (CMSP) and the Mines and Minerals (Development and Regulation) Act (MMDR).
7. Advisory Role: SBI Capital Markets is the sole transaction advisor for the Ministry in these commercial coal mine auctions.
8. Rail Connectivity: Efforts are being made to enhance rail connectivity for the efficient transportation of coal from mines.
9. Captive/Commercial Contribution: Captive and commercial coal mines are making a substantial contribution to overall production, according to Coal Secretary Amrit Lal Meena.
10. Future Investment: The Ministry emphasizes that investment in the coal sector offers good returns, considering the anticipated increase in domestic coal demand.
11. Underground Mining Expansion: The Ministry aims to increase production from underground coal mines to 100 mt by 2030, focusing on policy measures to promote underground mining.
12. Environmental Impact: Underground mining is highlighted for its lower environmental impact compared to open-cast mining, as it requires less deforestation and involves minimal displacement of people.

Underground Mining:

• Underground mining is a method of extracting minerals and valuable resources from beneath the Earth’s surface.
• Unlike surface mining, where minerals are extracted from an open pit, underground mining involves digging tunnels and shafts to reach the deposits located deep below the surface.
• This method is used for various types of minerals, including coal, metals, gemstones, and other geological resources.

Commercial Mining:

• Commercial mining refers to the process where private sector entities are permitted to engage in coal mining activities for commercial purposes without any end-use restrictions. The key features of commercial mining include:
• The introduction of commercial mining represents a shift from the earlier regime, where coal mining was largely dominated by public sector entities. This reform is aimed at attracting private investment, fostering competition, and promoting efficiency in the coal mining sector.

Star Rating Registration process for Coal and Lignite Mines

The Ministry of Coal has initiated the Star Rating Registration process for Coal and Lignite Mines for the financial year 2022-23.

Parameters Evaluated: The Star Rating policy assesses mines based on seven key parameters:

1. Mining Operations
2. Environment-related parameters
3. Adoption of Technologies
4. Best Mining Practices
5. Economic performance
6. Rehabilitation & Resettlement
7. Worker-related Compliance and Safety & security.

Process:

• Participating mines undergo a self-evaluation process.
• The top 10% performing mines undergo validation through inspections by a committee.
• The remaining 90% undergo an online review process.
• All participants can contribute to the evaluation by reviewing other mines.
• The Coal Controller’s Organization conducts the evaluation.
• Ratings range from Five Star to NO Star, comprehensively assessing each mine’s achievements.

Aim: The Star Rating system aims to:

• Foster competitiveness among mines.
• Recognize outstanding performance based on compliance with statutory provisions.
• Acknowledge the adoption of advanced mining technology.
• Recognize economic achievements.

The Star Rating Registration process aims to improve competitiveness and recognize excellence in the coal and lignite mining sector based on a comprehensive evaluation of various parameters.

About Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act)

The Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) has undergone several amendments to address various issues and bring about reforms in the mineral sector.

1. 2015 Amendment:
   • Introduced auction-based mineral concession allocation to enhance transparency.
   • Established District Mineral Foundation (DMF) for the welfare of communities affected by mining activities.
   • Created the National Mineral Exploration Trust (NMET) to promote exploration.
   • Imposed stricter penalties for illegal mining.
2. 2021 Amendment:
   • Focused on further reforms in the sector.
   • Removed the distinction between captive and merchant mines, aiming for a more competitive and efficient mining industry.

About Coal Controller Organisation

The Coal Controller Organisation, under the Ministry of Coal, plays a crucial role in overseeing and regulating various aspects of coal production, quality, and commercial transactions in India.

1. Inspection of Collieries:
   • Conducting inspections of coal mines to ensure the accuracy of the class, grade, or size of coal produced.
2. Directive Issuance:
   • Issuing directives related to the declaration and maintenance of grades of coal from a seam mined in a colliery.

About Directorate General of Mines Safety (DGMS)

The Directorate General of Mines Safety (DGMS) is another important regulatory agency, focusing on safety standards and practices in the mining industry. The mission of DGMS includes improving safety and health standards, implementing proactive safety and health strategies, and ensuring the well-being of personnel in the mining and petroleum industries.

About National Coal Index (NCI)

 The National Coal Index (NCI) is a price index introduced in June 2020 in India. It serves as a measure reflecting changes in coal prices relative to a fixed base year, which is the Financial Year 2017-18.

The NCI incorporates prices from various coal sales channels, including imports, and calculates the revenue share per tonne using a specific formula.

Key features of the National Coal Index (NCI) include:

1. Composition:
   • The NCI comprises five sub-indices, categorizing them into three for Non-Coking Coal and two for Coking Coal. This subdivision allows for separate indices for different types of coal.
2. Purpose:
   • The primary purpose of the NCI is to provide a comprehensive and representative measure of coal price changes. It is used to assess and reflect the dynamics of coal prices over time.
3. Auction Basis:
   • The Ministry of Coal utilizes the National Coal Index (NCI) for the commercial auction of coal mines. The revenue share in these auctions is determined based on the NCI.
4. Inclusion of Imports:
   • The NCI considers prices from all coal sales channels, including imported coal. This inclusive approach provides a holistic view of coal price movements.
5. Revenue Share Calculation:
   • The formula used in the NCI determines the revenue share per tonne. This calculation is crucial for commercial coal mine auctions, where the revenue-sharing mechanism is employed.
6. Dynamic Indicator:
   • By reflecting changes in coal prices, the NCI serves as a dynamic indicator that can be used by stakeholders in the coal industry for decision-making and planning.
7. Types of Coal Covered:
   • The inclusion of sub-indices for Non-Coking Coal and Coking Coal acknowledges the different characteristics and uses of these types of coal in industrial processes.