Day-2: Adani, Andhra govt unit among winners of coal blocks

Four coal blocks, including a coking coal mine, were grabbed by private players, including the Adani group, on Tuesday, signaling sufficient investor interest in the set of assets offered under the commercial mining policy. While more aggressive bidding was seen in the case of smaller blocks – Andhra Pradesh government-owned APMDC, the winner of Jharkhand’s Brahmadiha mine offered a revenue share of 41.75% to the state government, larger mines also saw good response.

On Monday, five commercial coal blocks were auctioned off; while Vedanta and Hindalco were among the winners of these blocks, the revenue share was close to 32% in two cases.

As many as 19 blocks are being auctioned in this batch by November 9.

Stratatech Mineral Resources, a unit of the Adani Group, won the Dhirauli coal block in Madhya Pradesh by offering a 12.5% revenue share. Adani Group entities had competed for three coal blocks on the first day of the bidding, but was not able to quote the highest rate for any mine.

For the Bandha block in Madhya Pradesh, Essel Mining and Industries quoted a 21% revenue share.

The mines won by Adani and Essel have annual peak production capacities of 3 million tonne (MT) and 5 MT, respectively. The smaller blocks witnessed more intense bidding, with Sarda Energy and Minerals quoting the highest bid of a 26% revenue share for the Sahapur West mine (0.6 MT) in Madhya Pradesh. State government undertaking Andhra Pradesh Mineral Development Corporation (APMDC) bagged the Brahmadiha block (0.15 MT) in Jharkhand, the only coking coal mine among the auctioned blocks, by quoting an aggressive 41.75% revenue share.

Other bidders who participated in Tuesday’s auction but did not win any coal block include Aditya Birla Group’s Hindalco Industries, Aurobindo Realty and JMS Mining. All the three firms had won one mine each on Monday’s auction. Vedanta and Yazdani International, respectively, had won the other two blocks among the five mines auctioned on Monday.

This is the first time that coal assets are being auctioned off through the new market-determined revenue share model, replacing the erstwhile fixed fee/tonne regime.

The Centre initially estimated commercial coal mining to contribute about `20,000 crore annually to states as revenue and potentially save `30,000 crore per annum by substituting thermal coal imports. However, the actual benefits seem to be much lower as the estimates were based on output from 41 mines with an annual peak production capacity of about 225 MT. While three of the blocks were removed from the list following the objections from Maharashtra and Chhattisgarh state governments, the Union coal ministry had received bids for only 23 coal mines out of the 38 blocks offered. Four mines received only one bid each, rendering them unqualified to be put up for auctions.