KOLKATA (miningweekly.com) - The Indian government has finalised a draft policy to use surplus coal from captive mines, which will see excess production handed over to either major Coal India Limited (CIL) or another designated agency determined by government.

Under no circumstances would the captive coal blocks allotted to industry users be permitted to sell the coal in the open market, and violation of this stipulation would lead to de-allocation of the block.

“The government has formulated the policy and it has now being circulated to various Ministries for comment,” Junior Coal Minister Pratik Prakashbapu Patil said.

“As per the Coal Mines Nationalisation Act, there is no provision for sale of coal from captive blocks in the open market.  Also, as per conditions laid down in allocation letters, usable middling rejects, during the beneficiation process, would have to be used captively by end-use plants specified in the allocation letter,” Patil said.

Simultaneously, the draft policy does not provide for excess coal handed over to CIL by the captive coal block owners to be returned to the owners at a later date when users’ coal requirements increase. CIL had opposed acting as a ‘banker’ of excess coal production from captive mines.

Independent thermal power producers, which had been allocated coal blocks, had sought a ‘coal banking’ facility with CIL, as production from the captive coal blocks often commenced earlier than power plants were completed, leading to idling of coal stockpiles at captive pitheads.

While the draft policy did not make such provisions, at the insistence of independent power producers and the Power Ministry, a final decision would be based on comments received, an official in the Coal Ministry said.

Patil said that violation of the ban on the open market sale of coal from captive mines was detected in the case of the Takli Jena block allotted to Central Collieries Company and the government had promptly declared the mining lease granted to the miner null and void.