- The Indian government says coal gasification or liquefaction will be incentivised through partial refund in revenue share. This will help India in becoming a “gas-based economy” as well as lower the environmental impact of coal.
- As of now, power, steel and cement companies can mine coal but for their own consumption after getting blocks through auction. State-owned
Coal India dominates commercial mining in India. - An ordinance was passed in Jan to lift the restrictions on end use of coal and to open coal sector for commercial mining. This was passed by the Lok Sabha and awaits nod from Rajya Sabha.
Finance Minister
Government will introduce competition, transparency and private sector participation in the coal sector through:
- Revenue sharing mechanism instead of regime of fixed ₹/tonne.
- Earlier, only captive consumers with end-use ownership could bid. Now, any party can bid for a coal block and sell in the open market.
- Entry norms will be liberalised, and nearly 50 blocks will be offered immediately.
- No eligibility conditions, only upfront payment with a ceiling.
The Indian government says coal gasification or liquefaction will be incentivised through partial refund in revenue share. This will help India in becoming a “gas-based economy” as well as lower the environmental impact of coal.
As of now, power, steel and cement companies can mine coal but for their own consumption after getting blocks through auction. State-owned Coal India dominates commercial mining in India.
An ordinance was passed in Jan to lift the restrictions on end use of coal and to open coal sector for commercial mining. This was passed by the Lok Sabha and awaits nod from Rajya Sabha.
“A seamless, comprehensive exploration-mining-production policy will be introduced for non-coal minerals like iron ore, bauxite etc.” Sitharaman said.
Five hundred mining blocks would be offered through an open and transparent auction process and the stamp duties will be brought down too.
Joint auction of bauxite and coal will take place to enhance the competitiveness of the aluminium industry. This way an aluminium producer who has the licence to mine bauxite need not wait, or rely on someone else, for power that is needed to run the factory.
The distinction between captive and non-captive mines. “Companies will be allowed to transfer the mining lease and sell unused minerals,” the Minister added.
“Hindalco shares are trading at 0.35 times the estimated FY22 book value. While consensus downgrades will be seen for the rest of the year, the current more than adequately discounts the same. We maintain BUY with an unchanged target price of ₹199/share,” an ICICI Securities report said last week.
That means the stock could jump a whopping 67% here on and that doesn’t factor the benefits from these reforms announced today.
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