KOLKATA (miningweekly.com) – The Indian government has laid down a stringent framework to prevent captive coal miners from selling off good quality coal under the guise of washery rejects or middling coal.

Since coal blocks allocated to end-users for captive consumption were not permitted merchant sale, the policy aimed to put a check on the surreptitious sale of good quality coal under the guise that the coal was of little use by end-users in their own end-use production units, a Coal Ministry official said.

The framework also laid down guidelines for the disposal of any coal that might be mined from the block in excess of end-user requirements, he added.

The Coal Ministry reiterated that every successful bidder at the coal block auction was not permitted to use the coal extracted for any purpose other than that specified in the end-use plan mentioned in the bid document. Furthermore any middling or washery-reject coal generated would be sold by the successful bidder, with prior approval of the Coal Controller’s office.

The framework for the handling of middling and washery reject coal was part of the Standard Coal Mines Development and Production Agreement that every successful bidder for a captive mine was mandated to sign with the government, the official said.

It had been stipulated that every miner adopt best industry practice aiming to reduce the generation of middling or washery rejects. Furthermore, every attempt should be made to use the lesser quality coal in end-use plants.

However, even if the miner was forced to resort to sale of middlings and rejects, it would have to maintain separate records for these sales, which would also not be allowed to exceed the ‘normative’ production limits laid down in the allocation agreement.

The policy lays down that in the case of excess coal production, the excess product would have to be supplied to the government’s Coal India Limited (CIL) at the ‘notified price’, meaning the price at which CIL made supplies to thermal power plants under fuel supply agreements.

Clarifying a related issue, the Coal Ministry said that in the case of coal supplied by CIL to user industries through auction of supply linkages, the ownership title of the coal consignment vested with the buyer the moment the coal left the colliery premises.

Thereafter, if the same coal volumes were washed at an independent washery, the onus would be on the coal buyer to maintain all records of original volumes of purchase quantity of rejects at the washery, cost of washing and value of rejects and the same data would need to be filed with the Power Ministry.

This would not only enable the fixing of power tariffs in the case of thermal power industry but also enable the Coal Ministry to keep tabs on the sale of middling and reject coal and to check the possibilities of diversion and sale of good quality coal through false declaration as middlings and rejects, the official said.