KOLKATA (miningweekly.com) – Indian coal major Coal India Limited (CIL) has rebuffed claims that coal should be classified as a biological resource, with the government of the central Indian province of Madhya Pradesh maintaining that it is on this basis that it should be mandatory for the miner to share profits.

The government also maintained that the extraction of coal, without provincial government permission, was punishable under biological diversity laws.

The government’s Biological Diversity Board has classified coal as a biological resource making it mandatory for CIL to share its profit from coal extracted from the region with either the board or the provincial government.

The board has also served notices to CIL subsidiaries, including South Eastern Coalfields Limited, Northern Coalfields Limited and Western Coalfields Limited, which have mines operating within the provinces’ territory without the permission of the provincial government.

In a communication to the board, the CEOs of the CIL subsidiaries challenged the board’s claim, maintaining that coal did not fall within the accepted definition of a biological resource and argued that the miner would not be able to comply with rules of the board relating to profit sharing or asking permission from it to extract coal.

With a deadlock between the board and CIL, the matter has been referred to the Coal and Environmental Ministries for clarification on whether coal should be classified as a biological resource.

Coal Ministry officials said that clarifications on the classification of coal as a biological resource would be contentious since a ruling in favor of the Madhya Pradesh government could trigger a snowballing effect, with other provinces following suit, which would have a negative impact on the financials of the coal miner.

While CIL was holding negotiations with the provincial government, as well as the Coal and Environment Ministries, in the hopes of an early resolution of the issue, the miner had made it clear that it would take legal recourse if talks did not yield results in its favor, considering the fact that around 80-million to 90-million tonnes a year of coal was mined from CIL’s operations in Madhya Pradesh.