MDO Concept - An answer to Indian captive coal mining

1. Tapas Das
Supdt. Engineer
Department of Mining and Beneficiation
M. N. DASTUR & COMPANY (P) LTD, Consulting Engineers, KOLKATA
01/02/2015

2. Preface
In the year 1992, Ministry of Coal build a screening committee constitute of
government officials from the Ministry of Coal, the Ministry of Railways and the
relevant state government to allocate a number of coal blocks on nomination basis,
which were not in the production plan of CIL and SCCL, to equilibrate rising demand
for coal in power and iron & steel sector.
From 1993 to 2011, 216 coal blocks were allocated, in which more than half of the
coal blocks were allocated in between 2005 to 2009, when government was preparing
for more transparent and improved allocation process.
In 2012, Central Vigilance Commission directed the Central Bureau of Investigation to
investigate the influence of corruption in the process of coal block allocation which is
known as Coal allocation scam or “COALGATE”.
In March 2014, the Controller and Auditor General of India (CAG) office reported that
the Government of India allocated coal blocks in an inefficient manner, which resulted
"windfall gain" to the coal block allottees. The Parliamentary Standing Committee also
reported that all coal blocks distributed between 1993 and 2008 were done in an
unauthorized manner and allotment of all mines in this period should be cancelled.
1

3. e-auction of coal blocks, 2015
The Supreme Court of India through its judgment dated August 25, 2014 read with its
order dated September 24, 2014 had cancelled allotment of 204 captive coal blocks.
Subsequent to the Supreme Court Judgment, The Coal Mines (Special Provisions)
Ordinance, 2014 (published on October 21, 2014), was promulgated and rules were
framed by Government of India for auction and allotment of all blocks which suffered
cancellation.
Pursuant to Section 6 of the ordinance, the Central Government appointed MSTC
Limited through Ministry of Coal, to organise a series of auctions for allocation of
captive coal blocks using its e-commerce website.
On December 24, 2014, MSTC announced that the e-auction of 24 coal mines of
Schedule-II of the ordinance will take place between February 14 to February 22,
2015. Subsequently MSTC will conduct next e-auction of 23 coal mines from
Schedule III of the ordinance in between February 25 to March 05, 2015.
MSTC will also conduct the process of allotment of coal blocks to government
companies on nomination basis according to the ordinance in between January 22 to
March 27, 2015.
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4. Captive coal blocks for allocation
3
SCHEDULE–II(MainlyBrownfield)
Sl. No. Name Prior Allottee State
005 Namchik Namphuk Arunachal Pradesh Mineral Dev. & Trading Corporation Arunachal Pradesh
026 Gare-Palma IV/4 Jayaswal Neco Ltd. Chhattisgarh
028 Gare-Palma IV/2 Jindal Power Ltd. (Now Jindal Steel & Power Ltd.) Chhattisgarh
029 Gare-Palma IV/3 Jindal Power Ltd. (Now Jindal Steel & Power Ltd.) Chhattisgarh
030 Gare-Palma-IV/1 Jindal Strips Limited (Now Jindal Steel & Power Ltd.) Chhattisgarh
037 Gare-Palma-IV/5 Monet Ispat Ltd. Chhattisgarh
040 Chotia Prakash Industries Ltd. Chhattisgarh
041 Gare-Palma-IV/7 Raipur Alloys & Steel Ltd. (Now Sarda Energy & Mineral Limited) Chhattisgarh
060 Parbatpur-Central Electrosteel Castings Ltd. Jharkhand
064 Tokisud North GVK Power (Govindwal Sahib) Ltd. Jharkhand
103 Kathautia Usha Martin Ltd. Jharkhand
107 Gotitoria (East) BLA Industries Ltd. Madhya Pradesh
108 Gotitoria (West) BLA Industries Ltd. Madhya Pradesh
110 Mandla North Jaipraskash Associates Ltd. Madhya Pradesh
114 Amelia (North) Madhya Pradesh State Mining Corporation Madhya Pradesh
119 Bicharpur Madhya Pradesh State Mining Corporation Ltd.(MPSMC) Madhya Pradesh
124 Sial Ghoghri Prism Cement Limited Madhya Pradesh
151 Marki Mangli-II Shree Veerangana Steels Maharashtra
152 Marki Mangli-III Shree Veerangana Steels Maharashtra
154 Belgaon Sunflag Iron & Steel Co. Ltd. Maharashtra
162 Talabira-I Hindalco Industries Ltd. Orissa
191 Sarisatolli Calcutta Electricity Supply Corporation Ltd. West Bengal
192 Ardhagram Sova Ispat Limited, Jai Balaji Sponge Ltd. West Bengal
200 Trans Damodar West Bengal Mineral Dev. & Trading Corp. Ltd. West Bengal

5. Captive coal blocks for allocation
4
SCHEDULE–III(MainlyGreenfield)
Sl. No. Name Prior Allottee State
008 Durgapur-II/Taraimar Bharat Alluminium Company Ltd. Chhattisgarh
010 Tara Chhattisgarh Mineral Development Corporation Ltd. Chhattisgarh
018 Durgapur-II /Sarya DB Power Ltd. Chhattisgarh
027 Gare-Palma IV/8 Jayaswal Neco Ltd. Chhattisgarh
048 Brinda Abhijeet Infrastructure Pvt. Ltd. Jharkhand
049 Sasai Abhijeet Infrastructure Pvt. Ltd. Jharkhand
050 Meral Abhijeet Infrastructure Pvt. Ltd. Jharkhand
066 Moitra Jayaswal Neco Ltd. Jharkhand
077 Jitpur Jindal Steel & Power Ltd. Jharkhand
080 Rohne JSW Steel Ltd., Bhushan Power & Steel Ltd., Jai Balaji Industries Ltd. Jharkhand
083 Dumri Nilachal Iron & Power Ltd., Bajrang Ispat Pvt. Ltd. Jharkhand
096 Ganeshpur Tata Steel Ltd., Adhunik Thermal Energy Jharkhand
102 Lohari Usha Martin Ltd. Jharkhand
115 Mandla South Madhya Pradesh State Mining Corporation Ltd. Madhya Pradesh
116 Dongeri Tal-II Madhya Pradesh State Mining Corporation Ltd. Madhya Pradesh
137 Kosar Dongergaon Chaman Metaliks Ltd. Maharashtra
141 Nerad Malegaon Gupta Metallics & Power Ltd.,Gupta Coalfields & Washeries Ltd. Maharashtra
153 Marki Mangli-IV Shree Veerangana Steels Maharashtra
152 Marki Mangli-III Shree Veerangana Steels Maharashtra
158 Jamkhani Bhushan Ltd. Orissa
164 Utkal B 1 Jindal Steel & Power Ltd. Orissa
168 Utkal B 2 Monet Ispat Ltd. Orissa
169 Mandakini Monet Ispat Energy Ltd., Jindal Photo Ltd.,Tata Power Company Ltd. Orissa
183 Utkal C Utkal Coal Ltd. (formerly ICCL) Orissa

6. ECL
SCCL
NLC
BCCL
CCLNCL
NEC
MCL
SECL
WCL
RSMML
GMDC
Lignite Coal
Coking & Non-cocking Coal
ABC Coal Mining Company/Subsidiary

7. Mine Developer and Operator (MDO)
Exploration / Geological /
Surveying Service
Mine Operator Logistic Service
Captive Coal
Using Industry
Power / Non Power
Coal India Limited
Ministry of Coal
By vesting power of supreme court Ministry of Coal has
appointed MSTC Ltd. For organising e-auction of coal mines
listed in The Coal Mines (Special Provision) Ordinance, 2014
OWNERS’ ENGINEER
Captive Coal Mine Allottee
Captive
Industry
Technical
CommercialCoalMine
Allocation
Royalty
Excess Coal
ProducedCoal

8. Scope of OWNERS’ ENGINEER
 Technical Due diligence and revalidation of earlier studies.
 Pre-feasibility and feasibility study.
 Detail project report.
 Financial analysis, cash flow forecast and cost management.
 Supervision of exploration & assessment of reserve.
 Mine-pit geotechnical services.
 Assessment of technical parameters to finalise mine size & technology selection.
 Pit optimization and mine design.
 Design and preparation of all engineering documents, drawings and schemes for
supporting infrastructures, mine workings, material handling system, transportation
routes and washing plant as required by owner, statuary and legislative organisations.
 Selection and sizing of major and auxiliary mining equipments.
 Procurement assistance Services as required by the client e.g. assess and verify
specifications, enquiries, tenders, expediting and inspection.
 Long term and short term planning.
Fill gaps between resource and expertise 7

9. Scope of OWNERS’ ENGINEER
 Preparation of request for qualification and request for proposal for MDO selection.
 Tender evaluation services as required by the client e.g. assess, verify, enquiries,
tenders, expediting and finalisation.
 Project management & site management services.
 Monitoring and supervision of construction, commissioning and operation, including
HS&E issues, quality control and training of MDO personnel to ensure compliance with
the conditions of contract, specifications and drawings.
 Design, assess and quality control of mine safety system.
 Environmental audit to prepare EIA and EMP.
 Submitting regular progress reports to the owner covering all aspects.
 Assisting owner in mine closure and document/records archiving.
Mercenary in technology provider to quality control 8

10. Scope of MDO
 Assisting Block allottee in
Physical Possession of Land.
Relocation & Rehabilitation (R&R) of Project Affected Persons/Families (PAP).
Training and engagement of PAP.
Legislative liaison .
 Procurement, installation / Construction and maintenance of Infrastructures.
 Procurement and Maintenance of Mining equipments.
 Construction and maintenance of in-mine haul / transportation roads.
 Complete operational planning and execution through systematic mining plan.
 Removal, transportation and disposal of Overburden.
 Procurement, Installation and Maintenance of Coal Handling & Washing Plant.
 Development & maintenance of transportation routes to Stockyard/Siding/End-use plant.
 Implementation of quality control and HS&E management activities.
 Land Reclamation, EMP and Mine Closure.
Operational Risks & Responsibilities will be borne by MDO 9

11. Probable List of MDO
Essel Mining
http://www.esselmining.com
Adani Mining
http://www.adanimining.com
JMS Mining Services Pvt. Ltd.
http://www.jmssimplex.com
Ambey Mining Pvt. Ltd.
http://www.amplgroup.in
Indian Mining Consultancy Pvt. Ltd.
http://www.indianmining.in
Integrated Coal Mining Pvt. Ltd.
http://icmlindia.com
Maheshwari Mining Pvt. Ltd.
http://maheshwaree.com
GVK Industries Ltd.
http://www.gvk.com
Saumya Mining Ltd
http://www.saumyamining.com
Mineral Exploration Corp. ltd.
http://www.mecl.gov.in
Thiess
http://www.thiess.in
Leighton
http://www.leighton.co.in
India Resources Limited
http://www.indiaresources.com.au
Minamento Mining Pvt Ltd
http://www.minamento.com
Virginia Mining Resources
http://www.virginiamr.com
Hargreaves Mining India
http://www.hsgplc.co.uk
Montecarlo Limited
http://www.mclindia.com
NCC Ltd.
http://ncclimited.com
ITCOL
http://indiantechnomac.com
AMR India Limited
http://www.amrgroup.in
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12. S
O T
WStrength
 Huge demand of coal in
domestic market of India.
 Captive use of coal face no
direct competition from market.
 Public Private Partnership (PPP)
model will increase cash flow.
 Distribution of CAPEX will
enable big projects without big
players.
Opportunity
 This model will attract more
Foreign Direct Investment (FDI).
 This model will encourage
advance technology transfer
through expert channel.
 Direct 30 years tenure for the
allotted coal blocks, which can
be extended another 20 years.
 Most of the allotted coal blocks
have difficult geology, which
supports mineral conservation.
Weakness
 Lack of sufficient information
for the allotted coal blocks.
 Most of the allotted coal blocks
have difficult geology, which will
affect mining efficiency.
 Bureaucratic delays in
governmental approvals.
 Poor Relocation & Rehabilitation
(R&R) and Corporate Social
Responsibility (CSR).
Threat
 No prior experience of MDO
model in Indian coal mining
sector.
 Political swing can effect
smooth build up of the model
in earlier stage.
 Improper allocation of risk and
rewards in the MDO model
can jeopardize the scenario.
 Import of better and cheaper
coal. 11

13. THANK YOU