JSPL share rises 11.3% on winning Chhattisgarh coal block

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Published: November 5, 2019 1:49:30 AM

The auctioned mine is part of the 27 blocks put up for bidding by the coal ministry after, in February 2019, the Cabinet allowed private companies to sell up to 25% of production from captive coal mines in the open market.

coal, coal sectorThe coal would be used to run the 840-MW captive power station and the 1.32-MTPA unit in the company’s Raigath steel plant.

Share price of Jindal Steel and Power (JSPL) went up 11.3% on Monday in the BSE, closing at Rs 137.25 after it became the highest bidder for the Gare Palma IV/1 coal block in Chhattisgarh. The coal mine, located about 30 km from its Raigarh steel plant, has the potential to produce 6 million tonne of the fuel every year. Against the reserve price of Rs 150/tonne, JSPL quoted Rs 230/tonne.

The coal would be used to run the 840-MW captive power station and the 1.32-MTPA unit in the company’s Raigath steel plant. “When the mine starts producing, we can cut our reliance on expensive coal procured through import or auctions conducted by the Coal India,” VR Sharma, managing director, JSPL, told FE. “The final confirmation from the government is yet to come,” Sharma added.

The auctioned mine is part of the 27 blocks put up for bidding by the coal ministry after, in February 2019, the Cabinet allowed private companies to sell up to 25% of production from captive coal mines in the open market. The block earlier belonged to JSPL, before the apex court, in its September 2014 order, had cancelled the licences of 204 captive blocks, saying these had been allocated in an illegal and arbitrary manner. The company had already made significant investments to transport extracted coal smoothly from the mine.

The mine was later put up for auction in 2015, where Balco — a business unit of Vedanta — quoted `1,585 per tonne to win the block. However, the auction was cancelled due to allegations of discrepancies. According to sources, Vedanta also participated in Monday’s auction, which lasted for nearly four hours.

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