Mining Sector Current Affairs

CCEA approves methodology for auction of commercial coal mines to private sector

The Cabinet Committee on Economic Affairs (CCEA) has approved methodology for auction of coal mines/blocks for sale of coal to private sector under Coal Mines (Special Provisions) Act, 2015 and Mines and Minerals (Development and Regulation) Act, 1957.

This decision opens coal sector to commercial mining by private eblntiti, ending 41 year old monopoly ot state owned Coal India Ltd (CIL). It will allow power cement and steel producers to source fuel more efficiently.

Background

Supreme Court in its September 2014 order had cancelled 204 coal mines and blocks allocated to various Government and Private Companies since 1993 under the provisions of Coal Mines (Nationalisation) Act, 1973.  The pursuance of this order, Parliament had enacted Coal Mines (Special Provisions) Act, 2015 to bring transparency and accountability for allocation of coal mines by way of auction and allotment for the sale of coal.

Under this methodology

The auction will be ascending forward auction whereby bid parameter will be price offer in Rs./tonne which will be paid to State Government on actual production of coal. There shall be no restriction on the sale and utilization of coal from coal mine.

Moreover, the entire revenue from auction of coal mines will accrue to coal bearing States. It will incentivise these states to utilize this increased revenue for growth and development of backward areas and their inhabitants including tribals.

Significance

The methodology gives highest priority to transparency, ease of doing business and ensuring that natural resources are used for national development. It opens commercial coal mining for private sector and will help in boosting the economy. It is most ambitious coal sector reform since the nationalisation of this sector in 1973.

It will bring efficiency by moving coal mining from era of monopoly to competition and enable use of best possible technology. It will also attract higher investments and create more jobs in mining sector. It will also lead to the availability of low cost power as 70% of India’s electricity is generated from thermal power plants. States in Eastern part of the country will be especially benefited from this new methodology.

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IIP rises to 9-month high of 4.3% in August 2017

According to data released by Central Statistics Office (CSO), factory output measured in terms of Index of Industrial Production (IIP) has grown nine-month high to 4.3% in August 2017. This was mainly due to a robust performance of the mining and power sectors.

Key Facts

The manufacturing sector output grew 3.1% in August 2017, mining sector output surged 9.4% and electricity generation increased 8.3%. Production of capital good rose 5.4% in August 2017. Consumer durables output increased 1.6% and consumer non-durables output rose 6.9% in August 2017.

Index of Industrial Production (IIP)

The IIP is composite indicator that measures short-term changes in volume of production of basket of industrial products during given period with respect to chosen base period. It is compiled and published monthly by Central Statistical Organization (CSO), Ministry of Statistics and Programme Implementation.

The CSO had revised base year of IIP from 2004-05 to 2011-12 in May 2017 to capture structural changes in economy and improve quality and representativeness of indices. The revised IIP (2011-12) reflects changes in industrial sector and also aligns it with base year of other macroeconomic indicators like Wholesale Price Index (WPI) and Gross Domestic Product (GDP).

The IIP covers 407 item groups. Sector wise these items falls into 3 categories viz. Manufacturing (405 items), Mining (1 items) & Electricity (1 item). The weights of three sectors are 77.63%, 14.37%, 7.9% respectively. The revised eight core Industries have combined weightage of 40.27% in IIP.

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