1. Coal auction: JSW Steel, Adani Power and Usha Martin bag mines

Coal auction: JSW Steel, Adani Power and Usha Martin bag mines

Adani Power, Usha Martin and JSW Steel bagged mines in the second leg of coal block auction that began...

By: | New Delhi | Updated: March 4, 2015 10:11 PM
Coal auction, coal mines, Adani power, Usha Martin Usha Martin beat BALCO, Sesa Sterlite and Easternrange Coal Mining Pvt Ltd to bag Brinda and Sisai mines in Chatra in Jharkhand. Adani Power has bagged the Jitpur mine, according to an official. (Reuters)

Adani Power, Usha Martin and JSW Steel bagged mines in the second leg of coal block auction that began today.

Government has put on auction atleast 15 ready-to-produce mines in the second leg of auction. All the four mines in the first day of the ongoing auction phase are in Jharkhand.

Adani Power bagged Jitpur mine, located in Godda district has extractable reserves of 65.535 million tonnes (MT), according to an official.

It beat the likes of Adhunik Power and Natural Resources, Jaiprakash Power Ventures and Jindal Power. Jitpur mine, earlier allocated to Jindal Steel & Power Ltd (JSPL), was earmarked for the power sector.

“Jitpur closes at (Rs) 302 (per tonne),” Coal Secretary Anil Swarup tweeted.

Usha Martin won Brinda and Sisai mines, earmarked for non-power sector, at a bid of Rs 1,804 tonne.

“Usha Martin is the highest bidder at (Rs) 1804 for Brinda and Sasai coal block,” Coal Secretary Anil Swarup tweeted.

Usha Martin participated in e-auction of Brinda and Sasai coal blocks for meeting captive requirements of fuel for steel making and power generation, the company said in a BSE filing.

Bid opened at Rs 1802 and soon closed at Rs 1804. Both mines fall under schedule III category for which certain regulatory clearances are yet to be obtained.

Brinda and Sasai coal mines have total extractable reserves of 25.40 million tonnes (MT). Brinda and Sasai are two coal mines but government came out with one bid for both.

Usha Martin beat BALCO, Sesa Sterlite and Easternrange Coal Mining among others to bag the two mines in Chatra of Jharkhand. The blocks were earlier allotted to Abhijeet Infrastructure Pvt Ltd.

JSW Steel bagged Moitra mine, according to an official.

“Moitra coal block closes at Rs 1512,” Swarup tweeted.

Others in race for Moitra mine, earmarked for non power sector, were Jayaswal Neco Industries Ltd, JSW Steel and SAIL. Moitra mine, situated in Hazaribagh district, has 29.91 MT extractable reserves. It was earlier alloted to Jayaswal Neco.

There are two methods of bidding for auction of coal blocks–forward bidding (for unregulated sectors like steel, cement and captive power) and reverse bidding (for specified end use for power generation).

Mandakini mine (for power sector) in Odisha and Meral mine (for non-power sector) in Jharkhand are on auction tomorrow.

The auction proceeds from first lot of 19 mines is over Rs 1 trillion. The auction follows the Supreme Court’s decision last year to cancel allocation of 204 coal mines.

The companies in the race for Mandakini mine are Adani Power Ltd, Adani Power Maharashtra Ltd, GMR Mining and Energy Pvt Ltd, Jindal Power Ltd, Mandakini Exploration and Mining Ltd and Wigeon Commotrade Pvt Ltd.

The firms vying for Meral mine are Easternrange Coal Mining Pvt, Trimula Industries Ltd and Usha Martin Ltd.

Other mines on auction in the second lot include Tara in Chhattisgarh; Nerad Malegaon in Maharashtra; Dumri in Jharkhand; Ganeshpur in Jharkhand; Mandla South in Madhya Pradesh; Gare-Palma Sector-IV/8 in Chhattisgarh; Utkal C in Odisha; Lohari in Jharkhand and Jamkhani in Odisha.

The government, which was to begin the auction of second lot of mines last month, had to put it off to March 4 because of litigation issues.

From auctioned 19 mines in the first lot, it came out with the list of successful bidders for just 15 mines. The rest four mines are being re-examined by the Nominated Authority as there were some issues including pricing of the bids.

In the reverse auction, the government sets a ceiling price that is representative of production cost of Coal India. The private sector companies, which are considered more efficient, are expected to bid at lower price.

For example, if the ceiling price is Rs 1,000 and the bidder bids Rs 800, then the benefit of Rs 200 is directly passed on to consumers. This would mean if the power is sold at Rs 3.50, out of which Re 1 is cost coal and the same will become 80 paise because of pass through benefit of Rs.200. Thus, the new price of power will be Rs 3.30 a unit.

In case the bids touch zero, meaning that the private producer is ready to pass on the benefit of coal extraction to power consumers, there would be a forward bidding.

Under the forward bidding, the companies will be required to mention the price which they are willing to give to States.

Tags: Coal Auction
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